The Shape of Production Functions and the Direction of Technical Change
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This pai>er views the standard production function in macroeconomics as a reduced form and derives its properties from microfoundations. The shape of this production function is governed by the distribution of ideas. If that distribution is Pareto, then two results obtain: the global production function is Cobb-Douglas, and technical change in the long run is labor-augmenting. Kortum showed that Pareto distributions are necessary if search-based idea models are to exhibit steady-state growth. Here we show that this same assumption delivers the additional results about the shape of the production function and the direction of technical change.
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The macro-level stability of labor's share disguised a lot of instability at the industry level.
“The macro-level stability of labor's share was always, as Keynes remarked,”
From The Fall of the Labor Share and the Rise of Superstar Firms* (2020) · cites this paper as Jones, 2005
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Acemoglu, D., & Restrepo, P. (2018) · American Economic Review · doi:10.1257/aer.20160696 · Cited by 3,121 · see citing works
The Fall of the Labor Share and the Rise of Superstar Firms*
Autor, D., Dorn, D., Katz, L. F., Patterson, C., & Van Reenen, J. (2020) · The Quarterly Journal of Economics · doi:10.1093/qje/qjaa004 · Cited by 2,206 · see citing works
The Changing Economics of Knowledge Production
Abis, S., & Veldkamp, L. (2023) · The Review of Financial Studies · doi:10.1093/rfs/hhad059 · Cited by 167 · see citing works
- Authors
- Jones, C. I.
- Affiliations
- National Bureau of Economic Research (US)
- Corresponding author
- Jones, C. I.
- Venue
- The Quarterly Journal of Economics
- Publisher
- Oxford University Press (OUP)
- Published
- 2005-05-01
- Volume
- 120
- Issue
- 2
- Pages
- 517-549
- ISSN
- 0033-5533 (ISSN-L)
- 1531-4650
- OpenAlex
- W2167248677
- Cited by
- 380
- References
- 2
- Citations by year
- 2026: 3 · 2025: 12 · 2024: 20 · 2023: 21 · 2022: 15 · 2021: 16 · 2020: 16 · 2019: 14 · 2018: 25 · 2017: 22 · 2016: 16 · 2015: 27 · 2014: 25 · 2013: 24 · 2012: 24
- FWCI
- 47.54
- Type
- journal article
- Language
- en
- Open access
- green
- papers.nber.org
- Locations
- The Quarterly Journal of Economics (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic Growth and Productivity
- Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Economic Theory and Policy
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic theories and models
- Keywords
- technological change, Pareto distribution, Cobb-Douglas production function, microfoundations, steady-state growth
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