Intellectualization and substitution elasticity of capital on the labour force in logistics enterprises: evidence from China and the United States

ABSTRACT

This paper addresses the substitution elasticity of capital on the labour force in the context of the development of intellectualization. Given the substitution of capital for labour, China’s benchmark listed logistics companies are compared with an American company to discuss the evolution of capital – labour substitution. A large-scale intellectualization process began in 2017, and based on a variable elasticity of substitution, this paper creates an econometric model of substitution elasticity between capital and labour and its evolution between 2017 and 2021. The American logistics company UPS maintains a relatively high level of substitution elasticity, and Chinese logistics companies are quickly catching up. The substitution elasticity of capital on labour in Chinese enterprises trends upward year after year. In 2021, the capital – labour substitution elasticity of logistics enterprises in both countries showed considerable growth. The calculation model of substitution elasticity presented in this paper can be extended to different regions and industries to measure intelligent development levels and the relationship between capital and the labour force.

KEYWORDS:

• Intellectualization
• elasticity of substitution
• capital
• labour force
• VES

Acknowledgements

We are grateful for gaining inspiration for the research method from Sushanta K. Mallick, Ali M. Kutan, and Huangnan Shen, as well as from participants in the Enterprise Growth and Economic Development in Western China workshop at Yunnan University in 2019 and the MIT International Faculty Fellows Conference at Tsinghua University in 2018. All remaining errors are strictly the responsibility of the authors.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

The work was supported by the Chinese Social Science Funds [21BSH050]; Major project of National Social Science Fund [20&zd013].