Can the Marginal Productivity Theory of Distribution be Tested?
Review of Radical Political Economics
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Felipe, J., & McCombie, J. (2015). Can the Marginal Productivity Theory of Distribution be Tested?. Review of Radical Political Economics, 47 274-291. https://doi.org/10.1177/0486613414557918
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.
marginal productivity theory of distribution, aggregate production function, accounting identity, statistical artefact
The authors received no financial support for the research, authorship and/or publication of this article.
External DOI: https://doi.org/10.1177/0486613414557918
This record's URL: https://www.repository.cam.ac.uk/handle/1810/246625