I propose a new decomposition of aggregate total factor productivity. I model productivity as an index of unmeasured factors of production, and decompose the conditional factor demand for this index. With this model of productivity, changes in the price of labor or capital cause substitution to...

Estimates of price substitution among capital, labor, and energy are critical to numerous policy issues. Estimating factor share equations of the translog production function requires constant returns to scale and competitive factor markets. The present estimates find mixed evidence on these...

This paper examines the relationship between inputs in industrial production. The inputs studied here are capital, labor, and research and development (R&D). Using translog technology, our cross-industry analysis of six industries reveals that capital and labor are complements in production...