Estimating the Cost of Capital and the Profit Share

Has van Vlokhoven

The Economic Journal, 2024, vol. 134, issue 661, 2175-2206

Abstract: Capital costs are not directly observed since firms own part of their capital stock. I show under which assumptions variation in firms’ input choices reveals the user cost of capital. Using Compustat data for the United States, I find that the costs of tangible capital as a share of output have not been increasing, while economic profits have been increasing over the past 50 years from around 4% to around 9% of sales. About three-quarters of the fall in the labour share is associated with a rise in profits and the remainder is associated with a rise in intangible intensity.

Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1093/ej/ueae001 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:econjl:v:134:y:2024:i:661:p:2175-2206.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The Economic Journal is currently edited by Francesco Lippi

More articles in The Economic Journal from Royal Economic Society Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press () and ().