![]() However, we show that more knowledge intensive firms can attain the threshold of non-diminishing returns faster than their counterparts. Relatively smaller firms have diminishing returns, while larger companies have non-diminishing to increasing returns to labour. Second, independently from the knowledge capital intensity, returns to labour increase with size. In computer architecture, Amdahl's law (or Amdahl's argument 1) is a formula which gives the theoretical speedup in latency of the execution of a task at fixed workload that can be expected of a system whose resources are improved. If social distancing alone is to be implemented longer than two weeks, a moderate shut down, say between 50 to 70, could be more effective for the society than a stricter complete shut down in yielding. First, we find that more knowledge intensive firms have nondiminishing returns to labour, while less knowledge intensive companies exhibit diminishing returns. Thus the diminishing return: Society would see smaller and smaller benefits to hospital demand the longer it spent social distancing. Our econometric analysis provides a number of results. ![]() In this paper, we propose a structural approach to test the hypothesis of non-diminishing returns to labour for a panel data set of R&D investing companies, and we explore how the marginal returns to labour vary with their level of knowledge capital (R&D) intensity. The law of Diminishing Returns states that the result of adding a factor of production is a smaller increase in output. However, theoretical studies on knowledge and labour specialization assume that an increase in the knowledge investment embodied in the human capital of workers raises the marginal product of labour. A basic assumption in the economic literature is the one of diminishing marginal returns to labour. The law of diminishing returns is an economic concept that applies to different areas of our lives.
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