Essays on factor shares, development accounting, and factor-eliminating technical change.

摘要

The stability of factor shares has long been considered one of the "stylized facts" of macroeconomics. However, the relationship between cross-country factor shares and economic development is dependent on how factor shares are measured. Most factor share studies acknowledge only two factors of production: total capital and total labor. The failure to acknowledge more than two factors yields misleading results. In the first essay I disentangle physical capital's share from natural capital's share and human capital's share from unskilled labor's share. Results reveal that non-reproducible factor shares decrease with the stage of economic development, and reproducible factor shares increase with the stage of economic development. This suggests that studies relying on the macroeconomic paradigm of constant factor shares should be revisited.;Development accounting nearly always assumes the constancy of factor shares. In the second essay I perform the development accounting exercise but allow factor shares to vary and distinguish between reproducible and non-reproducible factors. My approach yields results that stand in stark contrast to those previously attained. The general consensus is that at least half of the cross-country variation in output per worker accrues to the Total Factor Productivity (TFP) residual. With my approach, the majority of variation in output per worker accrues to factor shares, specifically physical capital's share and natural capital's share. Depending on the approach used to compute factor shares, TFP's explanatory power decreases by as much as 61 percentage points. This evidence does not, however, diminish the role of technical change. Rather, the evidence indicates the importance of acknowledging a new type of technical change, one that impacts factor shares.;Peretto and Seater (2009) develop a theory of factor eliminating technical progress that predicts a systematic relationship between factor shares and output per worker. The first essay verifies this systematic variation, and the second essay revisits one of many macroeconomic exercises that assume such variation does not exist: the estimation of the TFP residual. In the third essay, I extend the Peretto and Seater model by incorporating endogenous saving. Endogenous saving alters the model so that the possibility of a Solow Steady state is eliminated. All equilibrium paths lead to a production function that asymptotically becomes AK.