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Published online by Cambridge University Press: 05 October 2000
This paper utilizes the concept of almosthomogeneity to obtain a generalization of the elasticity offactor substitution. From this, an expression for the biasto technical change is derived that explicitly includes theindividual degrees of input homogeneity. It is shown thatthe relative values of these homogeneity parameters canaffect the magnitude and direction of the factor-saving biasto technical change. These parameters also influence thesize of the residual or unexplained component of aggregateoutput growth.