Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/86470
Authors: 
Bowen, Harry P.
Munandar, Haris
Viaene, Jean-Marie
Year of Publication: 
2005
Series/Report no.: 
Tinbergen Institute Discussion Paper 05-045/2
Abstract: 
We show that in a fully integrated economy, in which there is free mobility of goods and factors, each member’s share of total output will equal its shares of total stocks of productive factors (i.e., physical and human capital). We label this result the equal-share relationship. This relationship also holds in the presence of technological differences or costs of factor mobility among members if outputs or inputs are properly measured to reflect such differences or costs. The equal-share relationship is the limiting distribution of output and factors among members of a fully integrated economy, and it constraints the set of policies that can affect each member’s relative growth within an integrated economy. We empirically examine for the equal-share relationship for alternative economic groups (i.e., US states, EU countries, Developing Countries and a World comprising 55 countries). Our findings indicate that the equal-share relationship holds strongly for US states, holds weakly for EU countries, but does not hold for Developing Countries or the World.
Subjects: 
Distribution of production
economic growth
economic convergence
factor mobiity
integrated economy
JEL: 
E13
F15
F21
F22
O57
Document Type: 
Working Paper

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