Labor Income Share Dynamics With Variable Elasticity Of Substitution
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Labor Income Share Dynamics With Variable Elasticity Of Substitution
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Author : Saumik Paul
language : en
Publisher:
Release Date : 2019
Labor Income Share Dynamics With Variable Elasticity Of Substitution written by Saumik Paul and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019 with categories.
The accumulation principle suggests that complementarity between capital and labor forces the labor income share to rise in the presence of capital accumulation. The CES model estimates using data from 20 Japanese industries between 1970 and 2012 explain the same outcome but with substitutable factor inputs. To resolve this puzzle, this paper proposes a variable elasticity of substitution (VES-W) framework that embodies a variable elasticity of substitution and a share parameter as a non-linear function of the Weibull distribution of capital-labor ratio. Empirical findings support the choice of a variable elasticity of substitution. While the estimated structural parameters calibrate the actual output level and the movements in factor income shares reasonably well in both the CES and VES-W models, the VES-W model outcomes support the accumulation principle by achieving the same result but with complementary factor inputs.
Labor Income Share
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Author : Saumik Paul
language : en
Publisher: Springer Nature
Release Date : 2020-10-01
Labor Income Share written by Saumik Paul and has been published by Springer Nature this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020-10-01 with Business & Economics categories.
This book is about labor income share, which measures the share of national income paid in wages. The global share of income going towards labor is declining, which suggests a more unequal distribution of income. This has sparked debates about fair distribution of personal incomes among academics and policymakers alike. This book joins the discussion by bringing together recent developments in theoretical and empirical research on labor income share and novel insights on the measurement of the labor income share. The aim of this book is to help design policies to reduce inequality and provide useful knowledge to academics, policymakers from government agencies, policy aides in research institutions and think tanks, and broader audiences from public and private organizations.
A Decline In Labor S Share With Capital Accumulation And Complementary Factor Inputs
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Author : Saumik Paul
language : en
Publisher:
Release Date : 2019
A Decline In Labor S Share With Capital Accumulation And Complementary Factor Inputs written by Saumik Paul and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019 with categories.
The role of capital accumulation as a driver of the labor income share requires capital and labor to be substitutes, which appears paradoxical in a world predominantly characterized by complementarity between capital and labor. This paper argues that the composition of skills in the labor force and an identification of the elasticity parameters between capital and different skills of labor can reconcile the opposing views. Using a framework with capital-skill complementarity and variable substitution elasticities, the Morishima elasticity of substitution is applied to identify the elasticity parameters at different skill levels and derive the necessary condition for capital accumulation to coexist with a declining labor income share when capital and labor are complements. Empirical evidence supports this proposition.
Technical Change Variable Elasticity Of Substitution And Economic Growth
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Author : Sharmila Gamlath
language : en
Publisher:
Release Date : 2015
Technical Change Variable Elasticity Of Substitution And Economic Growth written by Sharmila Gamlath and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015 with categories.
We incorporate a variable elasticity of substitution production function into an overlapping generations model à la Diamond (1965). We show that a certain parameter in the production function is a source of biased technical change is a crucial determinant of the economy's growth dynamics. For positive values of this parameter, which lead to an elasticity of substitution between capital and labour which is greater than 1, the economy always reaches a unique and stable steady state which is similar to the conditional convergence in the standard Solow growth model. For negative values of this parameter, which yield an elasticity of substitution below 1, the economy could either fall into a poverty trap; or display two steady states, of which one is stable while the other is not, which could, depending on the value of the initial capital stock, potentially result in divergence towards unbounded growth. These different outcomes are consistent with the observed diversity in international growth experiences. The capital biased technical change generated by a higher value of this parameter improves productivity in steady state, but causes an exacerbation of intergenerational inequality.
Prediction And Causality In Econometrics And Related Topics
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Author : Nguyen Ngoc Thach
language : en
Publisher: Springer Nature
Release Date : 2021-07-26
Prediction And Causality In Econometrics And Related Topics written by Nguyen Ngoc Thach and has been published by Springer Nature this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021-07-26 with Technology & Engineering categories.
This book provides the ultimate goal of economic studies to predict how the economy develops—and what will happen if we implement different policies. To be able to do that, we need to have a good understanding of what causes what in economics. Prediction and causality in economics are the main topics of this book's chapters; they use both more traditional and more innovative techniques—including quantum ideas -- to make predictions about the world economy (international trade, exchange rates), about a country's economy (gross domestic product, stock index, inflation rate), and about individual enterprises, banks, and micro-finance institutions: their future performance (including the risk of bankruptcy), their stock prices, and their liquidity. Several papers study how COVID-19 has influenced the world economy. This book helps practitioners and researchers to learn more about prediction and causality in economics -- and to further develop this important research direction.
Labor Income Share In Asia
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Author : Gary Fields
language : en
Publisher: Springer
Release Date : 2019-08-09
Labor Income Share In Asia written by Gary Fields and has been published by Springer this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-08-09 with Business & Economics categories.
This is the first study that puts together a comprehensive and in-depth analysis of the drivers of the labor income share across a number of countries in Asia. This book provides an insightful companion to the study of labor income shares that plays a vital role in understanding the relationship between national income and personal income, and the relationship between wage inequality and wealth inequality. The timing of the book is ideal, as the ongoing debate over a global decline in the labor income share is far from settled. To this extent, evidence from the Asian countries is mixed. The labor income share in some Asian countries has been rising since the 1990s. The purpose of this edited volume is to gain more insights on the potential drivers of the Asian experience. The first half of the book pays attention to the measurement problems related to the earnings of self-employed and workers in the informal sector. Then it puts together country case studies examining a wide range of factors driving the labor income share in Asia.
Unraveling The Wage Output Disconnect The Role Of Labor Market Power
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Author : Melih Firat
language : en
Publisher: International Monetary Fund
Release Date : 2024-07-09
Unraveling The Wage Output Disconnect The Role Of Labor Market Power written by Melih Firat and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2024-07-09 with categories.
In this paper, we theoretically and empirically explore the role of firm labor market power in the wage-output relationship. We start by laying out a theoretical model with imperfect labor mobility between firms and sectors, which implies upward-sloping labor supply curves that firms face, allowing firms to have labor market power (i.e., wage markdown). Assuming firm heterogeneity under oligopsony, markdowns can be represented as a function of firm labor market share. The model implies that firms with higher labor market share, indicated by a higher payroll share in their respective sectors, exhibit a weaker relationship between the changes in wages and output. We test the model’s prediction using data from the European subsample of the ORBIS dataset spanning from 2000 to 2018. We find that: (i) the pass-through of firm value added growth to wage growth is lower for firms with a higher payroll share in their sectors, with about one-fifth of the pass-through disappearing in firms at the top 1 percentile of the payroll share distribution, relative to an atomic firm; (ii) this pattern holds across various subsamples and timeframes, and also after accounting for several alternative explanations; and (iii) the weakening in the link between value added and wages growth due to firm labor market power intensifies during the downturns in the labor market or in the overall economy.
Substitution Among Labor Labor And Capital In United States Manufacturing
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Author : James Howard Grant
language : en
Publisher:
Release Date : 1979
Substitution Among Labor Labor And Capital In United States Manufacturing written by James Howard Grant and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1979 with Economics, Mathematical categories.
Capital Labor Substitution Structural Change And The Labor Income Share
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Author : Francisco Alvarez-Cuadrado
language : en
Publisher:
Release Date : 2014
Capital Labor Substitution Structural Change And The Labor Income Share written by Francisco Alvarez-Cuadrado and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014 with categories.
Decreasing Hours The Labor Share And The Elasticity Of Substitution
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Author : Rafael Serrano Quintero
language : en
Publisher:
Release Date : 2018
Decreasing Hours The Labor Share And The Elasticity Of Substitution written by Rafael Serrano Quintero and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018 with categories.
The decline in the labor share has attracted the attention of economists in recent years. Empirical literature has documented that this decline can be explained by the increasing capital intensity of the U.S. economy. This paper proposes a mechanism that accounts for the increasing capital intensity - the slowdown of labor-augmenting technology. Under substitutability of capital and labor, such slowdown induces an increase in the rental rate to wage ratio, thus decreasing the labor share. To asses the empirical validity of this mechanism, I construct a general equilibrium model with a CES production function, a utility function compatible with decreasing hours of work, and use a supply-side system to estimate the model's parameters. I simulate the solution of the model using the actual series for the exogenous variables and I find that the model can account for between half and almost the full decline, depending on the particular specification considered.