Labor's shares - aggregate and industry: accounting for both in a model of unbalanced growth with induced innovation

Zuleta, Hernando; Young, Andrew T.

Ítem

Acceso Abierto

Labor's shares - aggregate and industry: accounting for both in a model of unbalanced growth with induced innovation

http://repository.urosario.edu.co/handle/10336/10789
https://doi.org/10.48713/10336_10789

Autores

Zuleta, Hernando

Young, Andrew T.

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Fecha

2007-01-17

Editor

Universidad del Rosario

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Abstract

The relative stability of aggregate labor's share constitutes one of the great macroeconomic ratios. However, relative stability at the aggregate level masks the unbalanced nature of industry labor's shares – the Kuznets stylized facts underlie those of Kaldor. We present a two-sector – one labor-only and the other using both capital and labor – model of unbalanced economic development with induced innovation that can rationalize these phenomena as well as several other empirical regularities of actual economies. Specifically, the model features (i) one sector ("goods" production) becoming increasingly capital-intensive over time; (ii) an increasing relative price and share in total output of the labor-only sector ("services"); and (iii) diverging sectoral labor's shares despite (iii) an aggregate labor's share that converges from above to a value between 0 and unity. Furthermore, the model (iv) supports either a neoclassical steadystate or long-run endogenous growth, giving it the potential to account for a wide range of real world development experiences.

Keywords

Labor's Share , Factor Shares , Development , Biased Technical Change , Capital Intensity

Citations

Zuleta, H., & Young, A. T. (2007). Labor's shares - aggregate and industry: accounting for both in a model of unbalanced growth with induced innovation. Bogotá: Universidad del Rosario, Facultad de Economía.