Increasing Employment, Diminishing Returns, Relative Shares and Ricardo

Paul Davidson

Chapter 2 in Inflation, Open Economies and Resources, 1991, pp 11-13 from Palgrave Macmillan

Abstract: Abstract In their note, ‘Increasing Employment, Diminishing Returns, and Relative Shares,’1 Messrs Horlacher and Smolensky accept my conclusion that changes in the rent share in the Ricardian system depend on a comparison of the rate of change of the marginal product in relation to the rate of change of the average product of labour. They then proceed to suggest some perverse total product functions which are characterized as having, within a given range of inputs, rising M/A ratios with diminishing returns. They indicate, therefore, that the fate of the rent share is even less determinate than I suggested in my previous note.2 Their comments, while having mathematical validity, are, I believe, not applicable to either the Ricardian system or the real world.

Keywords: Marginal Product; Average Curve; Labour Input; Constant Return; Relative Share (search for similar items in EconPapers)
Date: 1991
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DOI: 10.1007/978-1-349-11516-7_2

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