Embodied and disembodied technical change and the constant elasticity of substitution production function

This study examines the empirical basis for the suggestion that both disembodied technical progress and embodied technical progress in the capital stock and in labour have been important in the United States in the period 1947–1980. The results obtained by using a constant elasticity of substitution production function suggest that disembodied technical progress has been about 3% per year, embodied technical progress in the capital stock is in the neighbourhood of 3 to 4% annually and educational attainment significantly enhances labour productivity. Finally, when the structural stability of the underlying production relationship is examined, the period 1971–1980 gives rise to some inconsistency.