Our colleague published in the Review of Economic Dynamics

The paper by our colleague Dominika Ehrenbergerova and co-authors Sebastian Gechert, Tomas Havranek and Zuzana Irsova, focused on the elasticity of substitution between labor and capital, has been published in the prestigious journal Review of Economic Dynamics.

Authors collect more than 3100 estimates of the elasticity of substitution between labor and capital from 121 empirical studies and analyzed the relationship between the size of the estimate and the approach to estimation. Their results show that an estimate of the unbiased underlying elasticity (corrected for publication bias and other sources of heterogeneity) lies in the range 0–0.6. The weight of evidence accumulated in the empirical literature thus emphatically rejects the Cobb-Douglas specification.