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Working Paper
Micro data and macro technology
We study the implications of microeconomic heterogeneity for aggregate technology, showing that the aggregate elasticity of substitution between capital and labor can be expressed as a simple function of plant level structural parameters and sufficient statistics for plant heterogeneity. This allows for a new approach to estimating the aggregate elasticity using microeconomic data and allows us to examine how the aggregate elasticity varies over time or across countries. We then use plant level data from the Census of Manufactures to construct an aggregate elasticity of substitution for the ...