Production Function of Skilled and Unskilled Labour in a Model of a Non-Growing Russian Economy. - Aberdeen: ILM Conference Proceedings, October 11-12, 1999. PP.560-575.

Abstract

This paper builds a production function of skilled and unskilled labour for the economy that does not grow. The paper uses the constant elasticity of substitution production function (CES) of skilled and unskilled labour on the micro level as an important building stone. The paper obtains a production function on the macro level using the generalised Houthakker-Johansen model. The paper uses the macro production function as a core for description of production sectors in the model of Russian economy. Using Russian statistical data on output variables, this paper discussed the identification of new medium-run employment and wage equations of the model. The identification is based on the accuracy of fitting measured by the Theil’s index and on the accuracy of direction measured by the correlation index. The paper shows that an employment problem of the skilled workers in Russia follows from the problem of absence of proper investments.production function, skilled and unskilled labour, transition economy