Braaaaaaaains! The Undead Humbug Production Function: Now With Human Capital

Michael Isaacson

No 1513, Working Papers from New School for Social Research, Department of Economics

Abstract: This paper demonstrates that the human-capital augmented Cobb-Douglas function is identically equal to the rules of aggregate accounting with any factor indices and an arbi- trary `human capital' variable thrown in. It is demonstrated empirically that the term for `total factor productivity' does not show total factor productivity at all, but rather a factor share weighted geometric mean of the profit rate and the quotient of the wage rate and human capital. It is demonstrated empirically with randomly generated data that both the calculation of this term as well as tests of its explanatory power in development economics are the result of using an arbitrary variable correlative with wages. It is also a story about zombies.

Keywords: Capital; development accounting; human capital; methodology (search for similar items in EconPapers)
JEL-codes: A13 B4 C43 E13 E24 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2015-06
New Economics Papers: this item is included in nep-eff, nep-hrm, nep-mac and nep-pke
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http://www.economicpolicyresearch.org/econ/2015/NSSR_WP_132015.pdf First version, 2015 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:new:wpaper:1513

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