Why labor income shares seem to be constant?Journal of International Trade & Economic Development, 2007, vol. 16, issue 4, pages 551-557 Abstract: 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 several theoretical reasons for 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. The existence of a labor intensive sector that produces non-tradable goods would explain why labor income share has no correlation with income per capita. Keywords: Factor income shares; elasticity of output with respect to factors; two sector model (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: http://EconPapers.repec.org/RePEc:taf:jitecd:v:16:y:2007:i:4:p:551-557 Ordering information: This journal article can be ordered from Access Statistics for this article Journal of International Trade & Economic Development is edited by Pasquale M. Sgro and Bharat R. Hazari More articles in Journal of International Trade & Economic Development from Taylor and Francis Journals |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
Swedish Business School at Örebro University.