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An empirical note on factor shares

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  • Hernando Zuleta

Abstract

In general, empirical studies on growth consider, at most, three factors, physical capital, labor and human capital. Land, however, is also a production factor for many activities. In this study, we make growth regressions considering land as factor. We also propose an explanation for why labor and capital shares do not seem to have a trend: It is possible that an increasing trend in physical capital share is compensated by a decreasing trend in land share. Similarly, an increasing trend in human capital share may be compensated by a decreasing trend in raw labor share. We find empirical support for the claim that the elasticity of output with respect to reproducible factors, human and physical capital, is positively correlated with the income level. This result has important implications for economic growth theory and for empirical exercises related to economic growth.

Suggested Citation

  • Hernando Zuleta, 2007. "An empirical note on factor shares," Documentos de Trabajo 4363, Universidad del Rosario.
    • Handle: RePEc:col:000092:004363
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    File URL: http://repository.urosario.edu.co/bitstream/handle/10336/10985/4363.pdf
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    References listed on IDEAS

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    1. Hernando Zuleta, 2008. "Factor Saving Innovations and Factor Income Shares," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 836-851, October.
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    Cited by:

    1. Brad Sturgill & Hernando Zuleta, 2017. "Variable factor shares and the index number problem: a generalization. Abstract Factor shares vary over time and across countries, so incorporating variable factor shares into growth and development a," Economics Bulletin, AccessEcon, vol. 37(1), pages 30-37.
    2. Zuleta, Hernando, 2009. "If factor shares are not constant then we have a measurment problem. can we solve it?," Documentos de Trabajo 5744, Universidad del Rosario.
    3. Carolina Arteaga Cabrales, 2011. "Human Capital Externalities and Growth," Revista ESPE - Ensayos Sobre Política Económica, Banco de la República, vol. 29(66), pages 12-47, December.
    4. Hernando Zuleta, 2011. "Factor Shares, Income Distribution and Capital Flows," DEGIT Conference Papers c016_003, DEGIT, Dynamics, Economic Growth, and International Trade.
    5. Hernando Zuleta, 2015. "Getting Growth Accounting Right," Documentos CEDE 13814, Universidad de los Andes, Facultad de Economía, CEDE.
    6. Andrés O. Dávila & Manuel Fernández & Hernando Zuleta, 2021. "The Natural Resource Boom and The Uneven Fall of The Labor Share," Documentos CEDE 19427, Universidad de los Andes, Facultad de Economía, CEDE.
    7. Peretto, Pietro F. & Seater, John J., 2013. "Factor-eliminating technical change," Journal of Monetary Economics, Elsevier, vol. 60(4), pages 459-473.
    8. John Gilbert & Onur A. Koska & Reza Oladi, 2022. "Labor‐eliminating technology, wage inequality, and trade protectionism," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 24(6), pages 1249-1265, December.
    9. Georges Daw, 2024. "Impact of technical change via intermediate consumption: exhaustive general equilibrium growth accounting and reassessment applied to USA 1954–1990," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 23(1), pages 55-87, January.
    10. Zuleta, Hernando, 2012. "Variable factor shares, measurement and growth accounting," Economics Letters, Elsevier, vol. 114(1), pages 91-93.
    11. Perera-Tallo, Fernando, 2017. "Growing income inequality due to biased technological change," Journal of Macroeconomics, Elsevier, vol. 52(C), pages 23-38.
    12. Sturgill, Brad, 2014. "Back to the basics: Revisiting the development accounting methodology," Journal of Macroeconomics, Elsevier, vol. 42(C), pages 52-68.
    13. Brad Sturgill, 2009. "Cross-country Variation in Factor Shares and its Implications for Development Accounting," Working Papers 09-07, Department of Economics, Appalachian State University.
    14. Tiago Sequeira & Hugo Morão, 2020. "Growth accounting and regressions: New approach and results," International Economics, CEPII research center, issue 162, pages 67-79.
    15. Laura Liliana Moreno Herrera & Jorge Eduardo Pérez Pérez, 2009. "Biased Technological Change, Impatience and Welfare," DEGIT Conference Papers c014_046, DEGIT, Dynamics, Economic Growth, and International Trade.
    16. Andrés Álvarez & Camilo Gómez & Hernando Zuleta & Camilo Acosta, 2019. "Birth Rates, Factor Shares, and Growth," Documentos CEDE 17318, Universidad de los Andes, Facultad de Economía, CEDE.
    17. Sturgill, Brad, 2012. "The relationship between factor shares and economic development," Journal of Macroeconomics, Elsevier, vol. 34(4), pages 1044-1062.
    18. Brad Sturgill & Hernando Zuleta, 2016. "Variable Factor Shares and the Index Number Problem: A Generalization," Documentos CEDE 15038, Universidad de los Andes, Facultad de Economía, CEDE.
    19. Dawson, John W. & Sturgill, Brad, 2022. "Market Institutions and Factor Shares Across Countries," Structural Change and Economic Dynamics, Elsevier, vol. 60(C), pages 266-289.
    20. John Gilbert & Reza Oladi, 2021. "Labor‐eliminating technical change in a developing economy," International Journal of Economic Theory, The International Society for Economic Theory, vol. 17(1), pages 88-100, March.
    21. Andrew T. Young & Hernando Zuleta & Andrés F. García-Suaza, 2010. "Evidence of induced innovation in US sectoral Capital´s shares," Documentos de Trabajo 6740, Universidad del Rosario.
    22. John Seater & Karine Yenokyan, 2019. "Factor Augmentation, Factor Elimination, And Economic Growth," Economic Inquiry, Western Economic Association International, vol. 57(1), pages 429-452, January.
    23. repec:wvu:wpaper:10-03 is not listed on IDEAS

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    More about this item

    Keywords

    Factor Income Shares; Elasticity of output with respect to factors;

    JEL classification:

    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
    • F0 - International Economics - - General
    • O0 - Economic Development, Innovation, Technological Change, and Growth - - General

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