Marshall`s Rules with Aggregate Inputs

Alberto Behar ()

Economics Bulletin, 2011, vol. 31, issue 1, 812-819

Abstract: We establish the formal link between the separability of inputs in a production function and the aggregate elasticity of demand for those inputs. This validates the implicit assumption used when calculating an aggregate elasticity with aggregated input prices and provides a practical approach to calculating an aggregate elasticity when one has disaggregated prices. We illustrate the approach to add to a thin empirical literature on labor demand elasticities in developing countries by using South African data.

Keywords: Elasticity of substitution; labor demand; separability (search for similar items in EconPapers)
JEL-codes: J2 J3 (search for similar items in EconPapers)
Date: 2011-03-14
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