Piketty’s Elasticity of Substitution
A Critique
Bibliographic Data
| ID | 12229125 |
|---|---|
| Authors | Gregor Semieniuk (0000-0002-2747-595X, SOAS, University of London, London, UK, corresponding author) |
| Year | 2017 |
| Volume | 29 |
| Issue | 1 |
| Pages | 64-79 |
| Publication date | 2017-01-02 |
| Peer Reviewed | Yes |
| Open Access | No |
| Type | ARTICLE |
| Venue | Review of Political Economy (JOURNAL) |
| Journal identifiers | ISSN: 0953-8259 • E-ISSN: 1465-3982 |
| Publisher | Taylor & Francis (PUBLISHER • GB) |
| DOI | 10.1080/09538259.2016.1244916 |
| OpenAlex | W2204609963 |
| Language | EN |
| Citations received | 7 |
| References cited | 26 |
This article examines Thomas Piketty’s explanation of a falling wage share. Piketty explains rising income inequality between labor and capital as a result of one parameter of a production function: an elasticity of substitution, σ, between labor and capital greater than one. This article reviews Piketty’s elasticity argument, which relies on a non-standard definition of capital. In light of the theory of land rent, it discusses why the non-standard capital definition is a measure of wealth, not capital and is problematic for estimating elasticities. It then presents simple long-run estimates of σ in constant elasticity of substitution functions for Piketty’s data as well as for a subset of his capital measure that comes closer to the standard definition of productive capital. The estimation results cast doubt on Piketty’s hypothesis that σ is greater than one
Capital (architecture · Constant elasticity of substitution · Econometrics · Economics · Elasticity (physics · Elasticity of substitution · Function (biology · Inequality · Labour economics · Microeconomics · Neoclassical economics · Production (economics · Production function · Substitution (logic · Thermodynamics · Wage · Economic theories and models · Economic Theory and Policy · Income, Poverty, and Inequality · Mathematics
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| Unique citing works | 7 |
|---|---|
| Citations per year | 0.54 |
| Citation span | 2013 - 2024 (12) |
| Citation velocity | recent |
| Highly cited | No |
| Citation types | Neutral: 6 |