Arbeitspapier

A microfoundation for production functions: assignment of heterogenous workers to heterogenous jobs

In very different fields of economics, economic inference and policy evaluation require economists to parametrize a production function that links measures of input factors to measures of output. While doing so, strong assumptions are implicitly made about microeconomic variables governing the shape of the aggregate production function. In this paper, I develop an assignment model that provides a microeconomic foundation for aggregate production functions. The shape of the production function depends crucially on the distribution of workers and jobs and the type of technological changes depends crucially on the evolution of these distributions. Sufficient and necessary conditions are provided for the production function to be of the Constant Ratio of Elasticities of Substitution form, a form nesting the broadly used Constant Elasticity of Substitution form. This model provides a way to evaluate how stringent assumptions about the type of production function or technological change are by comparing the implied distribution of jobs and its evolution over time to observations of the distribution of jobs and its evolution over time.

Language
Englisch

Bibliographic citation
Series: IZA Discussion Papers ; No. 3312

Classification
Wirtschaft
Subject
Microfoundations of production function
tasks assignment
technical change
Produktionsfunktion
Mikroökonomische Fundierung
Arbeitskräfte
Anforderungsprofil
Matching
Technischer Fortschritt
Theorie

Event
Geistige Schöpfung
(who)
Dupuy, Arnaud
Event
Veröffentlichung
(who)
Institute for the Study of Labor (IZA)
(where)
Bonn
(when)
2008

Handle
Last update
10.03.2025, 11:42 AM CET

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Object type

  • Arbeitspapier

Associated

  • Dupuy, Arnaud
  • Institute for the Study of Labor (IZA)

Time of origin

  • 2008

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