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Can the Marginal Productivity Theory of Distribution be Tested?

Author

Listed:
  • Jesus Felipe

    (Asian Development Bank, Manila, Philippines)

  • John S. L. McCombie

    (University of Cambridge, UK)

Abstract

This paper shows why attempts to test the neoclassical aggregate marginal productivity theory of distribution are inherently flawed. The use of constant-price value data and an underlying accounting identity mean that the close correspondence often found between the “output elasticities†of a putative aggregate production function and the relevant factor shares is a mere statistical artefact. Likewise, the results of estimating neoclassical labor demand functions must, for the same reason, always give spurious results.

Suggested Citation

  • Jesus Felipe & John S. L. McCombie, 2015. "Can the Marginal Productivity Theory of Distribution be Tested?," Review of Radical Political Economics, Union for Radical Political Economics, vol. 47(2), pages 274-291, June.
    • Handle: RePEc:sae:reorpe:v:47:y:2015:i:2:p:274-291
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    More about this item

    Keywords

    marginal productivity theory of distribution; aggregate production function; accounting identity; statistical artefact;
    All these keywords.

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution

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