The value of the elasticity of substitution between labor and capital (ó) is a "crucial" assumption in the study of factor incomes (e.g., Piketty (2014a), Piketty and Zucman (forthcoming), Karabarbounis and Neiman (2014)) and long-run growth (Solow, 1956). This paper begins by examining the...

Large and sustained differences in marginal products of capital (MPKs) across countries are sharply at odds with the core implications of the neoclassical framework. Lucas (1990) and many subsequent studies have examined reasons for this MPK differential. In a recent contribution, Caselli and...