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The elasticity of substitution and labour-displacing technical change in post-apartheid South Africa

C. Friedrich Kreuser, Rulof Burger () and Neil Rankin ()

No wp-2015-101, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: This paper uses normalized constant elasticity of substitution production functions to estimate the elasticity of substitution and labour-augmenting technical change in South Africa over the period 1994-2012. We find elasticities of 0.6-0.9 and positive labour-augmenting technical change, which results in an increase in capital's income share relative to labour. More broadly, we find total factor productivity (TFP) growth rates of between 1 and 2 per cent across industries, although we find no TFP growth in the mining sector.

Keywords: Labour demand; Production functions (Economic theory) (search for similar items in EconPapers)
Date: 2015
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