Estimates of labour demand elasticities and elasticities of substitution using firm-level manufacturing data

Abstract

Using firm-level manufacturing data supplemented with wages from household survey data, this paper estimates translog cost functions to calculate labour demand elasticities and Allen Elasticities of Substitution between capital and four occupation types. It finds that own-price labour demand elasticities range from 0.56 to 0.8, that capital and all occupation types are substitutes and that most occupation types are themselves complements.