Micro Data and Macro Technology

We develop a framework to estimate the aggregate capital?labor elasticity of substitution by aggregating actions individual plants. The reflects within plants and reallocation across plants; extent heterogeneity in capital intensities determines their relative importance. use micro data on cross?section build up at point time. Interpreting our econometric estimates through lens several different models, we find that for U.S. manufacturing sector is range 0.5–0.7, has declined slightly since 1970. measure bias technical change assess decline labor's share income sector. Mechanisms rely changes supply factors, such as an acceleration accumulation, cannot account decline.