Marshall`s Rules with Aggregate Inputs

We establish the formal link between the separability of inputs in a production function and the aggregate elasticity of demand for those inputs. This validates the implicit assumption used when calculating an aggregate elasticity with aggregated input prices and provides a practical approach to calculating an aggregate elasticity when one has disaggregated prices. We illustrate the approach to add to a thin empirical literature on labor demand elasticities in developing countries by using South African data.