Template-type: ReDIF-Paper 1.0
Author-Name: Getachew, Yoseph
Author-Email: getachew@merit.unu.edu
Author-Workplace-Name: UNU-MERIT
Title: Public Capital and Income Distribution: a Marriage of Hicks & Newman-Read
Abstract: This paper examines how publicly provided inputs could affect income 
	 distribution. By applying the Newman-Read production function- a 
	 generalized Cobb-Douglas production function- to Hicks's idea of the 
	 determinant of factor share, such usually complex dynamics remain 
	 analytically tractable. The paper shows that whether public capital has 
	 an effect on income distribution dynamics depends on its elasticity of 
	 substitution to private capital. If the elasticity of substitution of 
	 public capital to private capital is greater than unity, then an 
	 investment in public capital increases its relative income share and, 
	 hence, decreases the private capital share. In such a case, public 
	 capital would have a positive impact on income distribution dynamics.
Classification-JEL: D31, H54, O41
Keywords: Income distribution, public capital, economic growth
Series: UNU-MERIT Working Papers
Creation-Date: 2008
Number: 2008-071
File-URL: https://unu-merit.nl/publications/wppdf/2008/wp2008-071.pdf
File-Format: application/pdf
File-Size: 275 Kb
Handle: RePEc:unm:unumer:2008071