IDEAS home Printed from https://ideas.repec.org/a/eee/reveco/v102y2025ics1059056025005702.html
   My bibliography  Save this article

Estimation of capital stock and the elasticity of capital-labor substitution in provincial industries in China

Author

Listed:
  • Zhang, Hao
  • Wang, Feng
  • Fan, Wenna
  • Jiang, Hongfei
  • Ling, Rui
  • Liu, Juan

Abstract

Capital stock is an important indicator of the level and potential of economic development of a country or region. The capital-labor elasticity of substitution is an important influence on economic growth, income distribution and social welfare. This study utilizes the depreciation backward calculation method to estimate the capital stock of 19 industries across 31 provinces in China, and analyzes its industry characteristics and regional distribution. On this basis, this study constructs a spatial econometric model based on the Constant Elasticity of Substitution (CES) production function to estimate the capital-labor elasticity of substitution for the 19 industries. The findings indicate that the capital stock sizes of China's manufacturing and real estate industry are significantly larger than those of other industries. The average annual growth rate of the capital stock in the scientific research and technical services industry is the highest, reaching 20.89 %. Furthermore, there is a phenomenon of capital aggregation in provinces radiated by the Bohai Economic Rim and the Guangdong-Hong Kong-Macao Greater Bay Area. In addition, the elasticity of capital-labor substitution for all industries are less than 1. Significant spatial correlation is observed in factor substitution for the mining, the transportation, warehousing and postal industry, the finance industry, the residential services, repair and other services industries as well as the education industry. Meanwhile, the substitution elasticity is positively correlated with industry capital intensity, technological intensity, skill intensity, and openness level. The results can provide basic data and decision-making references for the optimal allocation of resources and the improvement of economic efficiency in various provinces and industries, and can also provide benchmark parameters for many related studies.

Suggested Citation

  • Zhang, Hao & Wang, Feng & Fan, Wenna & Jiang, Hongfei & Ling, Rui & Liu, Juan, 2025. "Estimation of capital stock and the elasticity of capital-labor substitution in provincial industries in China," International Review of Economics & Finance, Elsevier, vol. 102(C).
    • Handle: RePEc:eee:reveco:v:102:y:2025:i:c:s1059056025005702
    DOI: 10.1016/j.iref.2025.104407
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1059056025005702
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.iref.2025.104407?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:reveco:v:102:y:2025:i:c:s1059056025005702. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/620165 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.