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Getting Income Shares Right

A Panel Data Investigation for Countries of the OECD

Ben-Gurion University, Beer-Sheva, Israel, aamer{at}bgu.ac.il

Suleiman Abu-Bader

Ben-Gurion University, Beer-Sheva, Israel

This article presents estimates of the shares of inputs in income for countries of the Organization for Economic Cooperation and Development, utilizing advanced panel data techniques. Its findings are as follows: A share of physical capital of over 0.50, as opposed to the conventional one third, is robust to several specifications of the production function; the organization's growth was driven mainly by accumulation of resources and not technological gains; and following the first oil shock, the share of physical capital dropped, whereas the share of human capital rose. Consequently, using the conventional shares may have led to overstating the severity of the post-1973 productivity slowdown.

Key Words: Organization for Economic Cooperation and Development • shares of inputs • growth accounting • total factor productivity • panel data

This version was published on August 1, 2009

Economic Development Quarterly, Vol. 23, No. 3, 254-266 (2009)
DOI: 10.1177/0891242408331025


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