Why labor income shares seem to be constant?
The common assumptions that labor income share does not change over time or across countries and that factor income shares are equal to the elasticity of output with respect to factors have had important implications for economic theory. However, there are various theoretical reasons why the elasticity of output with respect to reproducible factors should be correlated with the stage of development. In particular, the behavior of international trade and capital flows and the existence of factor saving innovations imply such a correlation. If this correlation exists and if factor income shares are equal to the elasticity of output with respect to factors then the labor income share must be negatively correlated with the stage of development. We propose an explanation for why labor income share has no correlation with income per capita: the existence of a labor intensive sector which produces non tradable goods.
|Date of creation:||01 Mar 2007|
|Contact details of provider:|| |
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.:
- Boldrin, Michele & Levine, David, 2002.
"Factor Saving Innovation,"
CEPR Discussion Papers
3262, C.E.P.R. Discussion Papers.
- Douglas Gollin, 2002.
"Getting Income Shares Right,"
Journal of Political Economy,
University of Chicago Press, vol. 110(2), pages 458-474, April.
- Alan B. Krueger, 1999.
"Measuring Labor's Share,"
American Economic Review,
American Economic Association, vol. 89(2), pages 45-51, May.
- Gary D. Hansen & Edward C. Prescott, 1999.
"Malthus to Solow,"
257, Federal Reserve Bank of Minneapolis.
- Hernando Zuleta, 2008.
"Factor Saving Innovations and Factor Income Shares,"
Review of Economic Dynamics,
Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 836-851, October.
- Hernando Zuleta, 2006. "Factor saving innovations and factor income shares," DOCUMENTOS DE TRABAJO 002706, UNIVERSIDAD DEL ROSARIO.
When requesting a correction, please mention this item's handle: RePEc:col:000092:003779. 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: (Facultad de Economía)
If references are entirely missing, you can add them using this form.