Economic Estimates of Capital and Disaggregated Labour in Northern Europe, 1953–85

The literature is full of studies of production functions with capital and labour aggregate indices, mainly for the economies or manufacturing industries of the USA and Canada. Traditional Cobb‐Douglas and CES specifications treated aggregate labour on the assumption that heterogeneous labour categories were highly substitutable. Berndt and Christensen proposed that a consistent aggregate of diverse labour exists if certain Allen‐Uzawa partial elasticities of substitution (AUES, denoted σij, i, j = factor inputs) are equal.