Holmes acknowledges financial support from the National Science Foundation through grant SES-0136842. We thank participants at many seminars for helpful comments. The views expressed herein are those of the authors and not necessarily those of the Federal Reserve Bank of Minneapolis or the Federal Reserve System.
A theory of factor allocation and plant size
Article first published online: 28 JUN 2008
© 2008, RAND
The RAND Journal of Economics
Volume 39, Issue 2, pages 329–351, Summer 2008
How to Cite
Holmes, T. J. and Mitchell, M. F. (2008), A theory of factor allocation and plant size. The RAND Journal of Economics, 39: 329–351. doi: 10.1111/j.0741-6261.2008.00017.x
- Issue published online: 16 SEP 2008
- Article first published online: 28 JUN 2008
This article develops a theory of how capital, skilled labor, and unskilled labor interact at the plant level. The theory has implications for the relationship between factor allocation and plant size and the effects of trade and growth on the skill premium. The theory is consistent with certain facts about factor allocation and factor price changes in the 19th and 20th centuries.