Semieniuk, Gregor - Bernard Schwartz Center for Economic Policy Analysis … - 2014
This note examines Thomas Piketty's (2014) explanation and prediction of simultaneously rising capital income ratio and … profit share by an elasticity of substitution, sigma, greater than one between labor and capital in an aggregate production … function. I review Piketty's elasticity argument, which relies on a non-standard capital definition. In light of the theory of …