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Replication data for: The Substitution Elasticity, Factor Shares, and the Low-Frequency Panel Model
- Chirinko, Robert S.
- Mallick, Debdulal
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Abstract
The value of the elasticity of substitution between labor and capital (σ) is a crucial assumption in understanding the secular decline in the labor share of income. This paper develops and implements a new strategy for estimating this crucial parameter by combining a low-pass filter with panel data to identify the low-frequency/long-run relations appropriate to production function estimation. Standard estimation methods, which do not filter out transitory variation, generate downwardly biased estimates of 40 percent to 70 percent relative to the benchmark value. Despite correcting for this bias, our preferred estimate of 0.40 is substantially below the Cobb-Douglas assumption of σ = 1.
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Is supplemented by
DOI: 10.1257/mac.20140302 (Text)
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Chirinko, Robert S., and Debdulal Mallick. “The Substitution Elasticity, Factor Shares, and the Low-Frequency Panel Model.” American Economic Journal: Macroeconomics 9, no. 4 (October 2017): 225–53. https://doi.org/10.1257/mac.20140302.
- ID: 10.1257/mac.20140302 (DOI)
Update Metadata: 2019-10-13 | Issue Number: 1 | Registration Date: 2019-10-13
Chirinko, Robert S.; Mallick, Debdulal (2016): Replication data for: The Substitution Elasticity, Factor Shares, and the Low-Frequency Panel Model. Version: 1. ICPSR - Interuniversity Consortium for Political and Social Research. Dataset. http://doi.org/10.3886/E114105V1
