Measuring capital-labor substitution: The importance of method choices and publication bias

We show that the large elasticity of substitution between capital and labor estimated in the literature on average, 0.9, can be explained by three issues: publication bias, use of cross-country variation, and omission of the first-order condition for capital. The mean elasticity conditional on the a...

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Bibliographic Details
Published in:Review of economic dynamics 2022-07, Vol.45, p.55-82
Main Authors: Gechert, Sebastian, Havranek, Tomas, Irsova, Zuzana, Kolcunova, Dominika
Format: Article
Language:English
Subjects:
Capital
Elasticity of substitution
Labor
Model uncertainty
Publication bias
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