 The determinants of capital intensity in Japan and the USDario Judzik () and Hector Sala Journal of the Japanese and International Economies, 2015, vol. 35, issue C, 78-98 Abstract: We estimate the determinants of capital intensity in Japan and the US, characterized by striking different paths. We augment an otherwise standard Constant Elasticity of Substitution (CES) model with demand-side considerations, which we find especially relevant in the US. In this augmented setting, the elasticity of substitution between capital and labor is placed between 0.74 and 0.90 in Japan, and around 0.30 in the US. We also find evidence of biased technical change, which is capital-saving in Japan but labor-saving in the US. These differences help us explain the diverse experience in the capital deepening process of these economies, and lead us to conclude that demand-side drivers, quite relevant in the US, may also be relevant to account for different growth experiences. A close look at the nature of technological change is also needed before designing one-size-fits-all industrial, economic growth, and/or labor market policies. Keywords: Capital intensity; Biased technological change; Elasticity of substitution; Capacity utilization rate; Employment (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jjieco:v:35:y:2015:i:c:p:78-98 DOI: 10.1016/j.jjie.2014.10.003 Access Statistics for this article Journal of the Japanese and International Economies is currently edited by Takeo Hoshi More articles in Journal of the Japanese and International Economies from Elsevier |
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