An empirical note on factor shares

Zuleta, Hernando

doi:10.1080/09638190802137034

Cited by 28 publications

(18 citation statements)

References 24 publications

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“…There have also been some efforts trying to demonstrate that factor shares if measured properly have clear trends. Zuleta (2008b) and Zuleta, Parada and Campos (2008) and Sturgill (2009) explain that the traditional assumption of two factors of production (capital and labor) does not distinguish properly between reproducible and non-reproducible factors. 6 They claim that physical capital and human capital are reproducible while raw labor and land are non-reproducible and calculate income shares for each of the four factors.…”

Section: Introductionmentioning

confidence: 99%

Factor Shares at the Sector Level, Colombia 1990-2005

2010

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In general, empirical studies on economics rely on the assumption of constant capital share of income both at the aggregate level and at the sector level. However, there is no empirical evidence supporting the constancy of capital share at the sector level. In this paper, using Colombian data, we measure capital share for 48 sectors during the period 1990-2005. We also explore the relation between capital's share and factor prices and the behavior of capital share during the business cycle. The main results are the following: (i) capital share is not constant but, rather, has an increasing trend; (ii) capital shares growth rates positively correlate with sector value-added growth; (iii) the capital shares behave pro-cyclically; and (iv) there is a positive correlation between capital shares and real wages and a negative correlation between capital shares and interest rates. These results suggest that the usual assumption of constant factor shares is not accurate.

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Section: Introductionmentioning

confidence: 99%

Factor Shares at the Sector Level, Colombia 1990-2005

2010

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“…Bound and Johnson () and Krueger () show that unskilled labor's income share in the United States has fallen substantially over time. Zuleta () shows that the same result holds for a broad array of countries and also shows that the income share of land (a nonreproducible form of capital) has fallen and the income share of physical capital (which is reproducible) has risen for the same countries. Peretto and Seater () provide evidence that the income share of total nonreproducible capital (land plus natural resources) has fallen.…”

Section: Introductionmentioning

confidence: 78%

Factor Augmentation, Factor Elimination, and Economic Growth

Seater

Yenokyan

2018

Economic Inquiry

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Economic growth theory distinguishes between reproducible and nonreproducible factors of production. In traditional growth models based on factor‐augmenting technical change, perpetual economic growth requires that each essential nonreproducible factor, such as labor, be augmented by a reproducible factor, such as human capital. Recent models of factor‐eliminating technical change deliver perpetual growth by eliminating the nonreproducible factors. Heretofore, the literature has kept factor augmentation and factor elimination separate. We analyze a model with both. The model generalizes the traditional factor augmentation approach by relaxing the usual restriction that factor elimination is absent. We obtain the striking result that factor‐augmenting technical change is a misspecification when factor‐eliminating technical change is present. The result raises several questions about technical change and endogenous growth. (JEL O41, O31, O33)

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“…As I state before, the models of capital using and labor saving innovations predict a positive relation between the income share of reproducible factors (the elasticity of output with respect to reproducible factors) and income per capita. This prediction is supported by the following pieces of evidence: In the field of empirical economic growth, Durlauf and Johnson (), Duffy and Papageorgiou (), and Zuleta () find that as economies grow, their technologies become more intensive in reproducible factors, that is, the elasticity of output with respect to reproducible factors is higher in rich economies. With regard to the behavior of factor income shares, I know that: ‐In United States, the share of land in Net National Product has a negative trend (see Rhee ) and, regarding cross‐section data, the income share of natural capital is negatively correlated with income per capita (Caselli and Feyrer ) ‐Over the past 60 years, the U.S. relative supply of skilled work has increased rapidly.…”

Section: Some Evidence About Factor Shares and Economic Growthmentioning

confidence: 92%

Factor shares, inequality, and capital flows

Zuleta¹

2015

Southern Economic Journal

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I present an endogenous growth model where innovations are factor saving and model the choice of technologies in an Overlapping Generations framework. Markets are competitive and factor prices are determined by marginal productivity of factors; therefore, the income share of reproducible factors increases with the stage of development. Beyond the standard results of this type of model I find that (i) without bequests long‐run growth is not possible, (ii) if the economy presents long‐run growth then intrageneration inequality may last forever but if the economy does not present long‐run growth then in steady state, there is no intrageneration inequality, (iii) when the economy is open, the pattern of capital flows depends not only on the relative abundance of factors but also on the technologies and, for this reason, capital may not flow from rich to poor economies, and (iv) consistently, capital flows may not help to break poverty traps.

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An empirical note on factor shares

Cited by 28 publications

References 24 publications

Factor Shares at the Sector Level, Colombia 1990-2005

Factor Shares at the Sector Level, Colombia 1990-2005

Factor Augmentation, Factor Elimination, and Economic Growth

Factor shares, inequality, and capital flows

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