Human Capital Misallocation and Output per Worker Differences: Beyond Cobb-Douglas. A new GLO Discussion Paper by Jan Trenczek and GLO Fellow Konstantin M. Wacker.

A new GLO Discussion Paper suggests that physical and human capital are less substitutable than Cobb-Douglas assumes.

GLO Discussion Paper No. 1331, 2023

Human Capital Misallocation and Output per Worker Differences: Beyond Cobb-Douglas – Download PDF
by Trenczek, Jan & Wacker, Konstantin M.

GLO Fellow Konstantin M. Wacker

Author Abstract: Misallocation of human capital across sectors can have substantial negative implications for aggregate output. So far, the literature examining this type of labor misallocation has assumed a Cobb-Douglas production function. Our paper departs from this assumption and instead considers more exible CES production functions with different labor skill types as individual inputs. Our estimates from sectoral data of 39 countries suggest that physical and human capital are less substitutable than Cobb-Douglas assumes. Our counterfactual results indicate that human capital misallocation can explain approximately 15% of output per worker variation across countries, which is substantially less than under a Cobb-Douglas specification (21%).

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Journal of Population Economics (JOPE)
JOPE (2022): CiteScore 9.2 (LINK) & Impact Factor 6.1; 524 K Downloads

ONLINE FIRST: 32 articles forthcoming in Volume 36, Issue 4, 2023. Covered issues: Historical demography; fertility and marriage; migration and refugee issues; health, vaccinations, risky behaviors; education; retirement; gender issues and preferences

JOPE invites paper submissions for the following collections:
– Abortions
– Covid-19 and diseases
– Lifecycle fertility models
– Sexual and domestic violence
– Sexuality including LGBT issues
– Statistics & measurement of population economics

For more details and for examples of already published papers in these collections see:
JOPE Collections are a set of published papers on issues of significant relevance for the journal. Authors are continuously invited to submit their related work for evaluation stating their specific interest to contribute in the submission cover letter. JOPE Editors will treat those submissions with particular interest and speedy handling. Articles will be immediately published after final acceptance.

GLO Discussion Papers are research and policy papers of the GLO Network which are widely circulated to encourage discussion. Provided in cooperation with EconStor, a service of the ZBW – Leibniz Information Centre for Economics, GLO Discussion Papers are among others listed in RePEc (see IDEAS,  EconPapers)Complete list of all GLO DPs – downloadable for free.

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