Chapter

Factor Shares

R. C. O. Matthews, C. H. Feinstein and J. C. Odling‐Smee

in British Economic Growth 1856-1973

Published in print October 1982 | ISBN: 9780198284536
Published online November 2003 | e-ISBN: 9780191596629 | DOI: http://dx.doi.org/10.1093/0198284535.003.0006

Series: Studies of Economic Growth in Industrialized Countries

 Factor Shares

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Factor shares are relevant to the weighting of labour and capital inputs in total factor input and are of interest in themselves. Labour's share in GNP rose from its lowest point of 51% in 1871 to 73% in 1973. The largest changes took place across the two wars, due to the fall in property income from abroad. But this merely undid the pre‐1914 change in this item in the opposite direction. The main source of the long‐run rise in labour's share was the fall in the share of domestic profits in GDP, roughly matched by a fall in the profit rate. Both a capital‐saving bias in technical progress and a trend increase in labour's bargaining power help to explain this.

Keywords: capital share; factor shares; labour share; profit rate

Chapter.  15254 words.  Illustrated.

Subjects: Economic History

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