A Microfoundation for Production Functions: Assignment of Heterogenous Workers to Heterogenous Jobs

Arnaud Dupuy ()

No 3312, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In very different fields of economics, economic inference and policy evaluation require economists to parametrize a production function that links measures of input factors to measures of output. While doing so, strong assumptions are implicitly made about microeconomic variables governing the shape of the aggregate production function. In this paper, I develop an assignment model that provides a microeconomic foundation for aggregate production functions. The shape of the production function depends crucially on the distribution of workers and jobs and the type of technological changes depends crucially on the evolution of these distributions. Sufficient and necessary conditions are provided for the production function to be of the Constant Ratio of Elasticities of Substitution form, a form nesting the broadly used Constant Elasticity of Substitution form. This model provides a way to evaluate how stringent assumptions about the type of production function or technological change are by comparing the implied distribution of jobs and its evolution over time to observations of the distribution of jobs and its evolution over time.

Keywords: tasks assignment; microfoundations of production function; technical change (search for similar items in EconPapers)
JEL-codes: D2 D3 J3 O3 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2008-01
New Economics Papers: this item is included in nep-bec
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Published - published in: Economica, 2012, 79 (315), 534-556.

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Journal Article: A Microfoundation for Production Functions: Assignment of Heterogeneous Workers to Heterogeneous Jobs (2012)
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