Testing for the Existence of a Consistent Aggregate Index of Labor Inputs

Ernst R. Berndt · Laurits R. Christensen

240 citations0/0 files storedAmerican Economic Review

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Labor market dynamics and wage inequality Global trade and economics Economic Growth and Productivity

Abstract

The purpose of the report is to estimate a production function for U. S. manufacturing with the labor input disaggregated into production and nonproduction workers, and then to test whether a consistent aggregate labor index exists. It is found that nonproduction workers and capital are complements, while production workers and capital are substitutes. This authors conclude that even though production and nonproduction workers in U. S. manufacturing are highly substitutable, there is no way to consistently aggregate them. (Author)

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