The Substitutability of Capital, Labor, and R&D in U.S. Manufacturing

Rajeev Goel

Bulletin of Economic Research, 1990, vol. 42, issue 3, 211-27

Abstract: This paper examines the relationship between inputs in industrial production. The inputs studied here are capital, labor, and research and development (R&D). Using translog technology, our cross-industry analysis of six industries reveals that capital and labor are complements in production while R&D and labor are substitutes. However, the relationship between capital and R&D is not so clear cut. It is also found that constant-returns-to-scale hold for only two of the six industries. A test of sensitivity to changes in the R&D depreciation rates suggests that some industries are sensitive to such changes. Copyright 1990 by Blackwell Publishing Ltd and the Board of Trustees of the Bulletin of Economic Research

Date: 1990
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