A Theory of Factor Allocation and Plant Size

Holmes, Thomas J.; Mitchell, Matthew F.

Download This Paper

Open PDF in Browser

Add Paper to My Library

A Theory of Factor Allocation and Plant Size

NBER Working Paper No. w10079

50 Pages Posted: 13 Nov 2003 Last revised: 16 Apr 2022

See all articles by Thomas J. Holmes

Thomas J. Holmes

University of Minnesota - Twin Cities - Department of Economics; National Bureau of Economic Research (NBER)

Matthew F. Mitchell

Rotman School of Management

Date Written: November 2003

Abstract

In this paper we develop a theory of how factors interact at the plant level. The theory has implications for: (1) the micro foundations for capital skill complementarity (2) the relationship between factor allocation and plant size and (3) the effects of trade and growth on the skill premium. The theory is consistent with certain facts about factor allocation and factor price changes in the 19th and 20th centuries.

Suggested Citation: Suggested Citation

Holmes, Thomas J. and Mitchell, Matthew F., A Theory of Factor Allocation and Plant Size (November 2003). NBER Working Paper No. w10079, Available at SSRN: https://ssrn.com/abstract=467547