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If factor shares are not constant then we have a measurment problem. can we solve it?

  • Zuleta, Hernando


Recent evidence show that factor shares, if properly measured, are far from constant.Moreover, the shares of natural resources and raw labor seem to be negativelycorrelated with income per capita while the share of human and physical capital ispositively correlated with income per capita. Now, if factor shares are not constantthen (i) growth accounting exercises rely on a false assumption and (ii) there is ameasurement problem. The effect that changes in factor shares have on output dependon the relative abundance of factors and, for this reason, it is necessary to havecorrect measures. We propose an empirical methodology to solve the measurementissue and estimate TFP growth.

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Paper provided by UNIVERSIDAD DEL ROSARIO in its series DOCUMENTOS DE TRABAJO with number 005744.

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Length: 6
Date of creation: 13 Aug 2009
Date of revision:
Handle: RePEc:col:000092:005744
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  1. Brad Sturgill, 2010. "Cross-country Variation in Factor Shares and its Implications for Development Accounting," 2010 Meeting Papers 152, Society for Economic Dynamics.
  2. Boldrin, Michele & Levine, David, 2002. "Factor Saving Innovation," CEPR Discussion Papers 3262, C.E.P.R. Discussion Papers.
  3. Hernando Zuleta, 2006. "Factor saving innovations and factor income shares," DOCUMENTOS DE TRABAJO 002706, UNIVERSIDAD DEL ROSARIO.
  4. Joseph Zeira, 2006. "Machines as Engines of Growth," DEGIT Conference Papers c011_059, DEGIT, Dynamics, Economic Growth, and International Trade.
  5. Hernando Zuleta, 2007. "Why labor income shares seem to be constant?," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 16(4), pages 551-557.
  6. Daron Acemoglu, 2001. "Directed Technical Change," NBER Working Papers 8287, National Bureau of Economic Research, Inc.
  7. Hernando Zuleta, 2008. "An empirical note on factor shares," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 17(3), pages 379-390.
  8. Francesco Caselli & James Feyrer, 2005. "The Marginal Product of Capital," NBER Working Papers 11551, National Bureau of Economic Research, Inc.
  9. Joseph Zeira, 1998. "Workers, Machines, and Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 113(4), pages 1091-1117.
  10. Alwyn Young, 1995. "The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 641-680.
  11. Douglas Gollin, 2002. "Getting Income Shares Right," Journal of Political Economy, University of Chicago Press, vol. 110(2), pages 458-474, April.
  12. Pietro Peretto & John J. Seater, 2006. "Augmentation or Elimination?," DEGIT Conference Papers c011_060, DEGIT, Dynamics, Economic Growth, and International Trade.
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