Profit rate dynamics, income distribution, structural and technical change in Denmark, Finland and Italy
Under less restrictive assumptions than in previous contributions, this paper highlights various patterns of profit rate dynamics that are common to the countries under scrutiny. Without a substantial re-distribution of income in favour of profits, the profit rate declines. When labour productivity is weak the profits/wages ratio declines leading to a decline in the profit rate, also due to capital deepening. Developments in the capital-labour ratio tend to increase the organic composition of capital while those in the ratio between the capital price deflator and the average wage tend to decrease it. Falls in the profit rate took place in countries with a weak technological change with episodes of Marxian bias. Employment shifted from low to high capital intensity sectors, from low to high organic composition industries and from low to high productivity sectors. Rising strength of labour and realization failures tend to have a greater role than rising organic composition in cyclical profit rate dynamics. Over the cycle, the first mechanism is also the first one to show up, while the others tend to follow it. Theoretical and policy implications are offered.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dumenil, Gerard & Glick, Mark & Levy, Dominique, 1993. "The Rise of the Rate of Profit During World War II," The Review of Economics and Statistics, MIT Press, vol. 75(2), pages 315-320, May.
- Burnside, Craig, 1998. "Detrending and business cycle facts: A comment," Journal of Monetary Economics, Elsevier, vol. 41(3), pages 513-532, May.
- Ortiz C. Etelberto, 2005. "Profitability Trends and Cycles: Structural Change in the Mexican Economy," Review of Radical Political Economics, Union for Radical Political Economics, vol. 37(2), pages 215-232, June.
- Canova, Fabio, 1993.
"Detrending and Business Cycle Facts,"
CEPR Discussion Papers
782, C.E.P.R. Discussion Papers.
- Weisskopf, Thomas E, 1979. "Marxian Crisis Theory and the Rate of Profit in the Postwar U.S. Economy," Cambridge Journal of Economics, Oxford University Press, vol. 3(4), pages 341-378, December.
- Bowles, Samuel, 1981. "Technical Change and the Profit Rate: A Simple Proof of the Okishio Theorem: Note [Technical Change and the Rate of Profit]," Cambridge Journal of Economics, Oxford University Press, vol. 5(2), pages 183-186, June.
- Samuelson, Paul, 2012.
"Understanding the Marxian Notion of Exploitation: A Summary of the So-CalledTransformation Problem Between Marxian Values and Competitive Prices,"
Russian Presidential Academy of National Economy and Public Administration, pages 182-202, August.
- Samuelson, Paul A, 1971. "Understanding the Marxian Notion of Exploitation: A Summary of the So-Called Transformation Problem Between Marxian Values and Competitive Prices," Journal of Economic Literature, American Economic Association, vol. 9(2), pages 399-431, June.
- Pasaran, M.H. & Im, K.S. & Shin, Y., 1995.
"Testing for Unit Roots in Heterogeneous Panels,"
Cambridge Working Papers in Economics
9526, Faculty of Economics, University of Cambridge.
- Miller, Jack L & Gowdy, John, 1998. "Vertically Integrated Measures of the Rate of Profit in the United States 1950-90," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 44(4), pages 555-563, December.
- Shaikh, Anwar, 1978. "Political Economy and Capitalism: Notes on Dobb's Theory of Crisis," Cambridge Journal of Economics, Oxford University Press, vol. 2(2), pages 233-251, June.
- Funke, Michael, 1986. "Influences on the Profitability of the Manufacturing Sector in the UK--An Empirical Study," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 48(2), pages 165-187, May.
- Maddala, G S & Wu, Shaowen, 1999. " A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 631-652, Special I.
- Canova, Fabio, 1998. "Detrending and business cycle facts: A user's guide," Journal of Monetary Economics, Elsevier, vol. 41(3), pages 533-540, May.
- Henley, Andrew, 1987. "Labour's Shares and Profitability Crisis in the U.S.: Recent Experience and Post-war Trends," Cambridge Journal of Economics, Oxford University Press, vol. 11(4), pages 315-330, December.
- Dumenil, Gerard & Levy, Dominique, 1990. "Post Depression Trends in the Economic Rate of Return for U.S. Manufacturing," The Review of Economics and Statistics, MIT Press, vol. 72(3), pages 406-413, August.
- Rudy Fichtenbaum, 1988. "'Business Cycles,' Turnover and the Rate of Profit: An Empirical Test of Marxian Crisis Theory," Eastern Economic Journal, Eastern Economic Association, vol. 14(3), pages 221-228, Jul-Sep.
- Edward N. Wolff, 2003. "What's behind the rise in profitability in the US in the 1980s and 1990s?," Cambridge Journal of Economics, Oxford University Press, vol. 27(4), pages 479-499, July.
- Uhlig, H.F.H.V.S. & Ravn, M., 1997.
"On Adjusting the H-P Filter for the Frequency of Observations,"
1997-50, Tilburg University, Center for Economic Research.
- Ravn, Morten O & Uhlig, Harald, 2001. "On Adjusting the HP-Filter for the Frequency of Observations," CEPR Discussion Papers 2858, C.E.P.R. Discussion Papers.
- Morten O. Ravn & Harald Uhlig, 2001. "On Adjusting the HP-Filter for the Frequency of Observations," CESifo Working Paper Series 479, CESifo Group Munich.
- James M. Poterba, 1999.
"The Rate of Return to Corporate Capital and Factor Shares: New EstimatesUsing Revised National Income Accounts and Capital Stock Data,"
NBER Working Papers
6263, National Bureau of Economic Research, Inc.
- Poterba, James M., 1998. "The rate of return to corporate capital and factor shares: new estimates using revised national income accounts and capital stock data," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 48(1), pages 211-246, June.
- Hahnel, Robin & Sherman, Howard, 1982. "The Rate of Profit over the Business Cycle," Cambridge Journal of Economics, Oxford University Press, vol. 6(2), pages 185-194, June.
- Moseley, Fred, 1985. "The Rate of Surplus Value in the Postwar U.S. Economy: A Critique of Weisskopf's Estimates," Cambridge Journal of Economics, Oxford University Press, vol. 9(1), pages 57-79, March.
- Marquetti, Adalmir A., 2003. "Analyzing historical and regional patterns of technical change from a classical-Marxian perspective," Journal of Economic Behavior & Organization, Elsevier, vol. 52(2), pages 191-200, October.
- Papadimitriou, Dimitri, 1990. "The political economy of Greece : An empirical analysis of Marxian economics," European Journal of Political Economy, Elsevier, vol. 6(2), pages 181-199, October.
- Agenor, Pierre-Richard & McDermott, C John & Prasad, Eswar S, 2000.
"Macroeconomic Fluctuations in Developing Countries: Some Stylized Facts,"
World Bank Economic Review,
World Bank Group, vol. 14(2), pages 251-285, May.
- C. John McDermott & Eswar S Prasad & Pierre-Richard AgÃ©nor, 1999. "Macroeconomic Fluctuations in Developing Countries; Some Stylized Facts," IMF Working Papers 99/35, .
- Weisskopf, Thomas E, 1985. "The Rate of Surplus Value in the Postwar U.S. Economy: A Response to Moseley's Critique," Cambridge Journal of Economics, Oxford University Press, vol. 9(1), pages 81-84, March.
- N/A, 1996. "Note:," Foreign Trade Review, , vol. 31(1-2), pages 1-1, January.
- Michel-Stéphane Dupertuis & Ajit Sinha, 2009. "A Sraffian critique of the classical notion of centre of gravitation," Cambridge Journal of Economics, Oxford University Press, vol. 33(6), pages 1065-1087, November.
- Michl, Thomas R, 1991. "Wage-Profit Curves in U.S. Manufacturing," Cambridge Journal of Economics, Oxford University Press, vol. 15(3), pages 271-286, September.
- Dumenil, G & Glick, Mark & Rangel, J, 1987. "The Rate of Profit in the United States," Cambridge Journal of Economics, Oxford University Press, vol. 11(4), pages 331-359, December.
- Andrea Vaona, 2011. "An empirical investigation into the gravitation and convergence of industry return rates in OECD countries," International Review of Applied Economics, Taylor & Francis Journals, vol. 25(4), pages 465-502.
- Fabrizio Ferretti, 2008. "Patterns of technical change: a geometrical analysis using the wage-profit rate schedule," International Review of Applied Economics, Taylor & Francis Journals, vol. 22(5), pages 565-583.
- Choi, In, 2001. "Unit root tests for panel data," Journal of International Money and Finance, Elsevier, vol. 20(2), pages 249-272, April.
When requesting a correction, please mention this item's handle: RePEc:eee:streco:v:22:y:2011:i:3:p:247-268. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.