https://macropaperwarehouse.com/authors/vahagn-jerbashian/Vahagn JerbashianHugo -- gohugo.ioen-usThu, 01 Jan 2026 00:00:00 +0000https://macropaperwarehouse.com/papers/on-the-elasticity-of-substitution-between-labor-and-ict-and-ip-capital-and-traditional-capital/Thu, 01 Jan 2026 00:00:00 +0000https://macropaperwarehouse.com/papers/on-the-elasticity-of-substitution-between-labor-and-ict-and-ip-capital-and-traditional-capital/<p>This paper estimates the elasticities of substitution between labor, information and communication technology (ICT) and intellectual property (IP) capital, and traditional capital using a nested constant elasticity of substitution (CES) production function. The motivation is twofold: standard macroeconomic models aggregate all capital into a single input and thus miss potentially distinct substitution relationships, and competing estimates of the labor-capital elasticity of substitution diverge sharply — with some finding gross substitutability (Karabarbounis and Neiman 2013) and others gross complementarity (Glover and Short 2020) — leaving unexplained the observed decline in labor income share across advanced economies.</p>