Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/108276
Authors: 
Herrendorf, Berthold
Herrington, Christopher
Valentinyi, Ákos
Year of Publication: 
2012
Series/Report no.: 
IEHAS Discussion Papers MT-DP - 2012/32
Abstract: 
This paper assesses the importance for structural transformation of three features of sectoral technology: labor-augmenting technological progress, capital intensity, and substitutability between capital and labor. We estimate CES production functions for agriculture, manufacturing, and services on postwar US data and compare them with Cobb-Douglas production functions with different and with equal capital shares. We find that sectoral differences in labor-augmenting technological progress are the main force behind the trends in observed relative prices and sectoral labor. As a result, sectoral Cobb-Douglas production functions with equal capital shares (which by construction abstract from differences in the elasticity of substitution and in capital shares) do a good job of capturing the postwar US structural transformation.
Subjects: 
CES production function
Cobb-Douglas production function
structural transformation
elasticity of substitution
JEL: 
O11
O14
ISBN: 
978-615-5243-36-3
Document Type: 
Working Paper

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