The stability of factor shares has long been considered one of the “stylized facts” of macroeconomics. However, the relationship between cross-country factor shares and economic development is dependent on how factor shares are measured. Most factor share studies acknowledge only two factors...

The standard baseline estimate in development accounting is imprecise because of a mismatch between the estimate of physical capital and the estimate of physical capital’s share, the fraction of total income accruing to physical capital. I adjust for this mismatch, and in so doing, incorporate...