Empirical Work on Production Functions
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Having a wide range of functional forms to choose among is obviously helpful when conducting qualitative investigations into questions of economic growth, income distribution, international trade and so on. However, it is often the case that some quantitative predictions are necessary. It is, for example, necessary to know the elasticity of substitution of the CES function before it will yield any information about the effect of wage increases on employment. This raises the question of how best to quantify the parameter values of the chosen functional form.
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