Re: OPE-L:_Wage_share

From: Ian Wright (iwright@GMAIL.COM)
Date: Fri Sep 10 2004 - 00:05:51 EDT

Dear Dave

(1) The 50/50 national income split is approximately reproduced in the
social relations model, but this doesn't necessarily mean much because
the wage rate is an exogenous parameter. I chose the wage rate to
reproduce the empirical data, including a rough-and-ready reproduction
of the national income split. But despite an exogenous wage rate I am
confident that the model can be used to help answer this question.

(2) Julian Wells is working on the distribution of the profit rate.
According to Julian, some empirical measures are gamma, but many are
not. In the social relations model the distribution can be
approximated by a parameter-mix of ratios of normal variates with
means and variances distributed according to a power-law. This is a
7-parameter distribution (i.e., it is more complex than most standard
distributions) and it can sometimes look like a gamma, a skewed
Laplace, an inverse Guassian etc. I have cc'd Julian on this message,
as he may have something to add. F&M's argument may go through even
with more complex distributional forms, however. But it may not. This
paper is relevant
although it is very tentative.

(3) When I get the time I will try to reproduce similar national
income splits to your data in the social relations model and measure
the variation of surplus value. I'll report back here when I have done
that. It is an interesting question to ask of it. My initial guess is
that a higher average surplus value will indeed increase the
volatility of firm revenues in the simulation, but without detailed
analysis I don't want to venture an explanation.

Best wishes,


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