Getting Income Shares Right: A Panel Data Investigation for OECD Countries

Aamer Abu-Qarn () and Suleiman Abu-Bader ()

No 701, Working Papers from Ben-Gurion University of the Negev, Department of Economics

Abstract: In this paper we reassess the conventional measure of the capital share in income by estimating the shares of inputs in income for 23 OECD countries for the period 1960-2003 utilizing panel data techniques. A share of physical capital of over 0.50, and not one-third as commonly accepted, is found to be robust to a variety of specifications of the production function and the econometric models used. Additionally, we find that following the first oil shock the share of physical capital dropped while the share of human capital rose. Consequently, using the conventional shares may have led to overstating the severity of the post-1973 productivity slowdown.

Keywords: OECD; Shares of Inputs; Growth Accounting; TFP; Panel Data (search for similar items in EconPapers)
JEL-codes: C23 O47 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2007
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Citations: View citations in EconPapers (11)

Published in Economic Development Quarterly as: Abu-Qarn, A. S. and Abu-Bader, S. (2009) “Getting Income Shares Right: A Panel Data Investigation for OECD Countries,” Economic Development Quarterly, 23(3), pages 254-266.

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Persistent link: https://EconPapers.repec.org/RePEc:bgu:wpaper:0701

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