MARX-BIASED TECHNICAL CHANGE AND THE NEOCLASSICAL VIEW OF INCOME DISTRIBUTION

This paper empirically tests two competing views about capital-labour substitution at the aggregate level in capitalist economies: the classical model with Marx-biased technical change versus the neoclassical model. Following <link rid="b13">Foley and Michl (1999</link>), the classical viability condition of technical change is used to draw out two different hypotheses about the profit share in national income corresponding to the two competing models. A stochastic version of the viability condition is empirically tested with data from the Extended Penn World Tables 2.1 using a simple cross-country estimation strategy. It is found that the data overwhelmingly rejects the neoclassical theory. Copyright © 2009 The Author. Journal compilation © 2009 Blackwell Publishing Ltd.