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

Bulletin of Economic Research, Vol. 42, No.3, pp. 211-227, 1990

Posted: 28 Sep 2014 Last revised: 5 Apr 2016

See all articles by Rajeev K. Goel

Rajeev K. Goel

Illinois State University - Department of Economics

Date Written: 1990

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.

Note: Copyright 1990 by Blackwell Publishing Ltd and the Board of Trustees of the Bulletin of Economic Research.

Suggested Citation

Goel, Rajeev K., The Substitutability of Capital, Labor, and R&D in U.S. Manufacturing (1990). Bulletin of Economic Research, Vol. 42, No.3, pp. 211-227, 1990. Available at SSRN: https://ssrn.com/abstract=2501597

Rajeev K. Goel (Contact Author)

Illinois State University - Department of Economics ( email )

Normal, IL 61790-4200
United States

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