Row 684

Row ID: 684 | Dataset Entry | Axioma AXP Content Repository

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I read the link you posted and the OP's article.

In the link you posted, they start with Cobb-Douglas, and because K/L is constant in that model (but not observed in reality) he moves on to a CES function. In summary:

>with a Cobb-Douglas production function, the capital and labor shares are entirely determined by the production function

The OP's paper agrees with this claim.

>"Capital's share of gross output (...) is fixed at alpha"

The issue is that, according to OP, Piketty does not stick to using capital's share of gross output, and instead switches to capital's share of net output when looking at the data.

What the OP is clarifying is that the capital share of net output measure, by itself, is not a sufficient statistic for inequality, because the labor share of net output can also increase at the same time. The two do not sum to 1, even in a Cobb-Douglas model, and there's no reason to think they would sum to one in most models.

FieldValue
text I read the link you posted and the OP's article. In the link you posted, they start with Cobb-Douglas, and because K/L is constant in that model (but not observed in reality) he moves on to a CES function. In summary: >with a Cobb-Douglas production function, the capital and labor shares are entirely determined by the production function The OP's paper agrees with this claim. >"Capital's share of gross output (...) is fixed at alpha" The issue is that, according to OP, Piketty does not sti…
label r/econpapers
dataType comment
communityName r/EconPapers
datetime 2021-07-31
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Raw Record

{
  "text": "I read the link you posted and the OP's article.\n\nIn the link you posted, they start with Cobb-Douglas, and because K/L is constant in that model (but not observed in reality) he moves on to a CES function.  In summary:\n\n>with a Cobb-Douglas production function, the capital and labor shares are entirely determined by the production function\n\nThe OP's paper agrees with this claim.\n\n>\"Capital's share of gross output (...) is fixed at alpha\"\n\nThe issue is that, according to OP, Piketty does not stick to using capital's share of gross output, and instead switches to capital's share of net output when looking at the data.\n\nWhat the OP is clarifying is that the capital share of net output measure, by itself, is not a sufficient statistic for inequality, because the labor share of net output can also increase at the same time.  The two do not sum to 1, even in a Cobb-Douglas model, and there's no reason to think they would sum to one in most models.",
  "label": "r/econpapers",
  "dataType": "comment",
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  "datetime": "2021-07-31",
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