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Measuring Factor Income Shares at the Sectoral Level

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  • Akos Valentinyi

    ()
    (University of Southampton; Institute of Economics - Hungarian Academy of Sciences)

  • Berthold Herrendorf

    ()
    (W.P.Carey School of Business)

Abstract

Many applications in economics use multi-sector versions of the growth model. In this paper, we measure the income shares of capital and labor at the sectoral level for the U.S. economy. We also decompose the capital shares into the income shares of land, structures, and equipment. We find that the capital shares differ across sectors. For example, the capital share of agriculture is more than two times that of construction and more than 50% larger than that of the aggregate economy. Moreover, agriculture has by far the largest land share, which mostly explains why it has the largest capital share. Our numbers can directly be used to calibrate standard multi-sector models. Alternatively, if one wants to abstract from differences in sector capital shares, our numbers can be used to establish that this is not crucial for the results.

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Bibliographic Info

Paper provided by Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences in its series IEHAS Discussion Papers with number 0803.

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Length: 38 pages
Date of creation: Mar 2008
Date of revision:
Handle: RePEc:has:discpr:0803

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Keywords: input-output tables; industry-by-commodity total requirement matrix; sector factor shares;

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  1. Davis, Morris & Heathcote, Jonathan, 2005. "The Price and Quantity of Residential Land in the United States," CEPR Discussion Papers, C.E.P.R. Discussion Papers 5333, C.E.P.R. Discussion Papers.
  2. Alan C. Stockman & Linda L. Tesar, 1991. "Tastes and technology in a two-country model of the business cycle: explaining international co-movements," Working Paper 9019, Federal Reserve Bank of Cleveland.
  3. Gregory W. Huffman & Mark A. Wynne, 1995. "The role of intratemporal adjustment costs in a multi-sector economy," Working Papers, Federal Reserve Bank of Dallas 9508, Federal Reserve Bank of Dallas.
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  5. Young, Andrew T., 2010. "One of the things we know that ain't so: Is US labor's share relatively stable?," Journal of Macroeconomics, Elsevier, Elsevier, vol. 32(1), pages 90-102, March.
  6. Maurice Obstfeld & Kenneth S. Rogoff, 1996. "Foundations of International Macroeconomics," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262150476, December.
  7. V. V. Chari & Patrick J. Kehoe & Ellen R. McGrattan, 1997. "The poverty of nations: a quantitative exploration," Staff Report, Federal Reserve Bank of Minneapolis 204, Federal Reserve Bank of Minneapolis.
  8. ten Raa,Thijs, 2006. "The Economics of Input-Output Analysis," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521602679.
  9. Douglas Gollin, 2002. "Getting Income Shares Right," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 110(2), pages 458-474, April.
  10. Karen J. Horowitz & Mark A. Planting, 2006. "Concepts and Methods of the U.S. Input-Output Accounts," BEA Papers, Bureau of Economic Analysis 0066, Bureau of Economic Analysis.
  11. Leamer, Edward E, 1980. "The Leontief Paradox, Reconsidered," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 88(3), pages 495-503, June.
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