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Date(s) - April 8, 2022
3:00 pm - 4:00 pm

BSB 103, Behavioral Sciences Building

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Join the Department of Economics for our Spring 2022 Seminar Series.

Friday, April 8| 3-4 p.m.

Behavioral Sciences 103

Dietrich Vollrath

Professor of Economics, University of Houston

Learn more: https://www.uh.edu/class/economics/people/current-faculty/vollrath/


“The Elasticity of Aggregate Output with Respect to Capital and Labor”


It is often assumed that the elasticity of GDP with respect to capital is one-third, but this depends on assumptions of zero markups and an aggregate production function. I estimate the elasticity allowing markups to vary by industry and with a rich input-output structure. Assumptions about industry capital costs provide bounds on the elasticity. In the U.S. from 1948-1995 the capital elasticity was 0.18-0.33 and rose to 0.21-0.39 in 1995-2018. Similar bounds hold across the OECD 2005-2015. Excluding housing or de-capitalizing intellectual property lowers those bounds. Based on this, common estimates of total factor productivity growth represent a lower bound.