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

Author

Listed:
  • 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.

Suggested Citation

  • Aamer Abu-Qarn & Suleiman Abu-Bader, 2007. "Getting Income Shares Right: A Panel Data Investigation for OECD Countries," Working Papers 0701, Ben-Gurion University of the Negev, Department of Economics.
  • Handle: RePEc:bgu:wpaper:0701
    as

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    File URL: http://in.bgu.ac.il/en/humsos/Econ/Workingpapers/0701.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

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

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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