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The role of capital-labour substitution in economic growth

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Purpose – Although the importance of the elasticity of substitution between capital and labour (s)
has been recognized in many areas in economics, this parameter has not received enough attention in
economic growth. The purpose of this paper is to review the recent development in the importance of s
in economic growth.
Design/methodology/approach – This paper specifically reviews the possibility of perpetual
growth and slowdown, and the asymptotic behaviour of the balanced growth path for different values
of s. It also reviews the determinants of the aggregate s.
Findings – Based on the empirical evidence that the value of s significantly departs from the
Cobb-Douglas value of unity, the paper recommends employing the constant elasticity of substitution
(CES) production function in both theoretical and empirical growth research.
Originality/value – This paper offers a new perspective on the elasticity of substitution between
capital and labour due to its evaluation of various factors, methods and approaches.

Keywords Economic growth, Capital, Labour, Elasticity of substitution, CES production function

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Informasi Detail

Judul Seri

Indian Growth and Development Review

No. Panggil

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Penerbit

: Emerald Group., 2012

Deskripsi Fisik

Indian Growth and Development Review Vol. 5 No. 1, 2012 pp. 89-101

Bahasa

English

ISBN/ISSN

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Klasifikasi

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Tipe Isi

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Tipe Media

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Tipe Pembawa

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Edisi

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Subjek

EKONOMI

Info Detail Spesifik

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Pernyataan Tanggungjawab

Asmawati/Syahrial

Versi lain/terkait

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