Labor-capital relations in the construction sector in Poland

Abstract

The aim of this paper is to estimate the Cobb-Douglas production function and the CES (constant elasticity of substitution) function for the construction sector in Poland. The period since 2002 is analyzed. Moreover, the Solow decomposition of the economic growth is estimated. Most of the models are linearized in order to apply the ordinary least squares for linear regression models. The CES function is estimated both with a help of Kmenta approximation and the nonlinear least squares (NLS) using a variant of the Levenberg–Marquardt algorithm. In a short literature review some recent findings for Polish economy are briefly reminded in the context of the current research. Finally, it is concluded that the technological progress (both in the national economy and in the construction sector) is approximately 3%. The Cobb-Douglas function is preferred over the CES function, both in the national economy and in the construction sector. Elasticities of the labor are greater than elasticities of the capital.

Keywords

• capital
• Cobb-Douglas function
• employment
• structural changes
• total factor productivity