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A Microfoundation for Production Functions: Assignment of Heterogenous Workers to Heterogenous Jobs

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Author Info
Dupuy, Arnaud () (ROA, Maastricht University)

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Abstract

In very different fields of economics, economic inference and policy evaluation require economists to parametrize a production function that links measures of input factors to measures of output. While doing so, strong assumptions are implicitly made about microeconomic variables governing the shape of the aggregate production function. In this paper, I develop an assignment model that provides a microeconomic foundation for aggregate production functions. The shape of the production function depends crucially on the distribution of workers and jobs and the type of technological changes depends crucially on the evolution of these distributions. Sufficient and necessary conditions are provided for the production function to be of the Constant Ratio of Elasticities of Substitution form, a form nesting the broadly used Constant Elasticity of Substitution form. This model provides a way to evaluate how stringent assumptions about the type of production function or technological change are by comparing the implied distribution of jobs and its evolution over time to observations of the distribution of jobs and its evolution over time.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3312.

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Length: 30 pages
Date of creation: Jan 2008
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Handle: RePEc:iza:izadps:dp3312

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Related research
Keywords: microfoundations of production function; tasks assignment; technical change;

Find related papers by JEL classification:
D2 - Microeconomics - - Production and Organizations
D3 - Microeconomics - - Distribution
J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
O3 - Economic Development, Technological Change, and Growth - - Technological Change

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Teulings, Coen N, 1995. "The Wage Distribution in a Model of the Assignment of Skills to Jobs," Journal of Political Economy, University of Chicago Press, vol. 103(2), pages 280-315, April. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Borghans Lex & Weel Bas ter, 2008. "Understanding the Technology of Computer Technology Diffusion: Explaining Computer Adoption Patterns and Implications for the Wage Structure," Research Memoranda 009, Maastricht : ROA, Research Centre for Education and the Labour Market. [Downloadable!]
    Other versions:
  2. Dupuy, Arnaud, 2008. "The Assignment of Workers to Tasks, Wage Distribution and Technical Change: A Critical Review," IZA Discussion Papers 3379, Institute for the Study of Labor (IZA). [Downloadable!]
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This page was last updated on 2009-11-23.


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