Definition: Separability

Category: OECD terminology

Mathematical property of a (production) function. In productivity analysis, it is sometimes assumed that production functions are weakly separable between primary and intermediate inputs. This means that the marginal rate of substitution between any pair of primary inputs is independent of the amount of intermediate inputs used. In other words, the demand for any two primary inputs depends only on the price ratio of primary inputs, and is independent from prices of intermediate inputs.
Organization for Economic Cooperation and Development (OECD), "Measuring Productivity - OECD Manual: Measurement of Aggregate and Industry-Level Productivity Growth", Paris, 2001