The Cobb-Douglas Production Function Once Again: Its History, Its Testing, and Some New Empirical Values

Research into the production function has a long history. Since the first work, in 1928, many studies have tended to support the hypothesis that production processes are well described by a linear homogeneous function with an elasticity of substitution of one between factors. New results are presented here, using 7 years of observations on Australian manufacturing industries during the 1950s and 1960s. In all seven cases, constant returns to scale are very closely approximated, and the coefficient for labor hovers near 0.6. The appropriate coincidence of the estimated coefficients with the shares received strengthens the competitive theory of distribution.