Explaining Movements in the Labor Share

Bentolila, Samuel; Saint‐Paul, Gilles

doi:10.2202/1534-6005.1103

Cited by 371 publications

(469 citation statements)

References 31 publications

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“…Consistent with my …ndings, Gollin (2002) shows that even after adjusting labor income to include self-employment income, employee compensation as a share of GDP di¤ers substantially across countries. Furthermore, other studies have documented large movements of the labor share in OECD countries and have related these movements to the capital-labor ratio (e.g., Blanchard, 1997 andBentolila andSaint-Paul, 2003). My estimates suggest that even for a country, the United States, with a relatively stable labor share, the evidence seems to reject a Cob-Douglas speci…cation of the aggregate production function.…”

Section: Resultsmentioning

confidence: 66%

Is the U.S. Aggregate Production Function Cobb-Douglas? New Estimates of the Elasticity of Substitution

Antràs

2004

Contributions in Macroeconomics

289

287

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I present new estimates of the elasticity of substitution between capital and labor using data from the private sector of the U.S. economy for the period 1948-1998. I first adopt Berndt's (1976) specification, which assumes that technological change is Hicks neutral. Consistently with his results, I estimate elasticities of substitution that are not significantly different from one. I next show, however, that restricting the analysis to Hicks-neutral technological change necessarily biases the estimates of the elasticity towards one. When I modify the econometric specification to allow for biased technical change, I obtain significantly lower estimates of the elasticity of substitution. I conclude that the U.S. economy is not well described by a Cobb-Douglas aggregate production function. I present estimates based on both classical regression analysis and time series analysis. In the process, I deal with issues related to the nonsphericality of the disturbances, the endogeneity of the regressors, and the nonstationarity of the series involved in the estimation.

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Section: Resultsmentioning

confidence: 66%

Is the U.S. Aggregate Production Function Cobb-Douglas? New Estimates of the Elasticity of Substitution

Antràs

2004

Contributions in Macroeconomics

289

287

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“…However, this is clearly not the case for many economies as demonstrated by Bentolila and Saint-Paul (2003). Also, allowing for biased technological progress makes Kaldor's 'stylized facts' consistent with any production function specification Antras (2004).…”

Section: The Ces Production Functionmentioning

confidence: 96%

“…This development has partly been due to the empirical observation that factor shares have not remained constant (see for example Bentolila and Saint-Paul (2003)) casting doubts on the validity of the popular CobbDouglas specification. More importantly, the revival of growth theory during the last decade (see Quah (1996) and Solow (1994)) makes the issue topical since other functional specifications can lead to different and richer theoretical results.…”

Section: Introductionmentioning

confidence: 99%

Long-run relationships between labor and capital: Indirect evidence on the elasticity of substitution

Juselius

2008

Journal of Macroeconomics

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This paper suggests an indirect method for making inference on the parameter region of the elasticity of substitution between capital and labor. The idea is to investigate if the observed behavior of the data is consistent with theoretical relationships that depend on the particular parameter region of the elasticity of substitution. The advantage of this approach is that it allows for more data oriented modeling. Long-run empirical relationships, consistent with a modeling approach for the economy that assumes a CES production function with an elasticity of substitution above one, are established using Finnish manufacturing data JEL Classification: C32, E23, E24, E25, O30, O52.

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“…• alter the optimal capital/labour ratio, thus modifying the long run equilibrium factor shares (Blanchard 1997, Bentolila andSaint-Paul 2003).…”

Section: Labour Market Institutions and Distribution: Existing Evidencementioning

confidence: 99%

Labour Market Institutions and Income Inequality

Checchi¹,

Garca-Pealosa²

Economic Policy

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract: The recent debate on trends in inequality in industrial countries has been marred by the lack of consensus about the relevant concept of inequality. Labour economists are concerned with inequality in earnings, macroeconomists with movements in the wage share, while policy-makers tend to focus on household income inequality. We provide a unifying framework to study the relationship between these three concepts of inequality and the way in which labour market institutions affect them. Institutions emerge as a key determinant of inequality, yet they play different roles depending on the extent to which they complement or substitute each other. As a result, we are able to propose a set of inequality minimizing institutions. Institutions that decrease inequality are, however, associated with higher unemployment, and our analysis allows us to quantify the magnitude of this trade-off. Terms of use: Documents in

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Explaining Movements in the Labor Share

Cited by 371 publications

References 31 publications

Is the U.S. Aggregate Production Function Cobb-Douglas? New Estimates of the Elasticity of Substitution

Is the U.S. Aggregate Production Function Cobb-Douglas? New Estimates of the Elasticity of Substitution

Long-run relationships between labor and capital: Indirect evidence on the elasticity of substitution

Labour Market Institutions and Income Inequality

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