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The elasticity of substitution and labour-displacing technical change in post-apartheid South Africa

Author

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  • Rankin Neil
  • Burger Rulof
  • Kreuser Friedrich

Abstract

This paper uses normalized constant elasticity of substitution production functions to estimate the elasticity of substitution and labour-augmenting technical change in South Africa over the period 1994-2012. We find elasticities of 0.6-0.9 and positive labour-augmenting technical change, which results in an increase in capital.s income share relative to labour. More broadly, we find total factor productivity (TFP) growth rates of between 1 and 2 per cent across industries, although we find no TFP growth in the mining sector. We also find that the sector with the highest TFP growth.agriculture.achieved this through shedding labour while steadily increasing output.

Suggested Citation

  • Rankin Neil & Burger Rulof & Kreuser Friedrich, 2015. "The elasticity of substitution and labour-displacing technical change in post-apartheid South Africa," WIDER Working Paper Series 101, World Institute for Development Economic Research (UNU-WIDER).
  • Handle: RePEc:unu:wpaper:wp2015-101
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    References listed on IDEAS

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    Cited by:

    1. Konstantin Makrelov & Channing Arndt & Rob Davies & Laurence Harris, 2018. "Stock-and-flow-consistent macroeconomic model for South Africa," WIDER Working Paper Series 007, World Institute for Development Economic Research (UNU-WIDER).
    2. Liisa Saikkonen, 2015. "Estimation of substitution and transformation elasticities for South African trade," WIDER Working Paper Series 104, World Institute for Development Economic Research (UNU-WIDER).

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    Keywords

    Labor demand; Production functions (Economic theory);

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