Can variable elasticity of substitution explain changes in labor shares?

Elasticity of substitution, long‐run growth, and convergence speed: A general framework

“…Bairam (1989Bairam ( , 1990, Duffy and Papageorgiou (2000), Karagiannis et al (2005), and Ialenti and Pialli (2024) provide empirical evidence in favor of a VES technology. 1 Furthermore, Cantore et al (2017) and del Lores (2019, 2023) show the importance of assuming a VES technology for explaining the postwar evolution of the US economy, whereas Bellocchi and Travaglini (2023) show that it can help explain the changes in labor share. Therefore, it is interesting to study the link between the EOS and economic growth in models in which technology features a VES.…”