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Getting Income Shares Right: A Panel Data Investigation for OECD Countries

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  • Aamer Abu-Qarn

    ()
    (Department of Economics, Ben-Gurion University of the Negev)

  • Suleiman Abu-Bader

    ()
    (Department of Economics, Ben-Gurion University of the Negev)

Abstract

In this paper we reassess the conventional measure of the capital share in income by estimating the shares of inputs in income for 23 OECD countries for the period 1960-2003 utilizing panel data techniques. A share of physical capital of over 0.50, and not one-third as commonly accepted, is found to be robust to a variety of specifications of the production function and the econometric models used. Additionally, we find that following the first oil shock the share of physical capital dropped while the share of human capital rose. Consequently, using the conventional shares may have led to overstating the severity of the post-1973 productivity slowdown.

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File URL: http://www.econ.bgu.ac.il/papers/228.pdf
File Function: First version, 2006
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Bibliographic Info

Paper provided by Ben-Gurion University of the Negev, Department of Economics in its series Working Papers with number 228.

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Length: 34 pages
Date of creation: 2007
Date of revision:
Publication status: Published in Economic Development Quarterly as: Abu-Qarn, A. S. and Abu-Bader, S. (2009) “Getting Income Shares Right: A Panel Data Investigation for OECD Countries,” Economic Development Quarterly, 23(3), pages 254-266.
Handle: RePEc:bgu:wpaper:228

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Keywords: OECD; Shares of Inputs; Growth Accounting; TFP; Panel Data;

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  12. Abu-Qarn, Aamer S. & Abu-Bader, Suleiman, 2007. "Sources of Growth Revisited: Evidence from Selected MENA Countries," World Development, Elsevier, vol. 35(5), pages 752-771, May.
  13. Ben S. Bernanke & Refet S. Gürkaynak, 2002. "Is Growth Exogenous? Taking Mankiw, Romer, and Weil Seriously," NBER Chapters, in: NBER Macroeconomics Annual 2001, Volume 16, pages 11-72 National Bureau of Economic Research, Inc.
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  16. Mankiw, N Gregory & Romer, David & Weil, David N, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 407-37, May.
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  18. Duffy, John & Papageorgiou, Chris, 2000. " A Cross-Country Empirical Investigation of the Aggregate Production Function Specification," Journal of Economic Growth, Springer, vol. 5(1), pages 87-120, March.
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Cited by:
  1. Axel Dreher & Pierre-Guillaume Méon & Friedrich Schneider, 2012. "The devil is in the shadow. Do institutions affect income and productivity or only official income and official productivity?," Working Papers CEB 12-019, ULB -- Universite Libre de Bruxelles.
  2. Luciano Fanti, 2012. "Consequences of a boost of mandatory retirement age on long run income and PAYG pensions," Discussion Papers 2012/149, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.

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