Abstract
Most economic theories, both classical and neoclassical, assume a tendency for equalisation in profit rates both among industries within a country and among countries over time.1 Indeed, in the Heckscher-Ohlin model, the key assumption made is that factor prices, both profit rates and wage rates, will tend toward equality both among industries and among countries.2 Moreover, most theories assume that the equilibrating mechanism is the flow of capital to the industries and countries with relatively high profit rates. Surprisingly, the evidence on both of these hypotheses is rather scant.
It should be noted that the views expressed in this chapter are those of the authors and do not necessarily reflect the views of the World Bank. We would like to acknowledge the excellent research assistance of Maury Gittleman and the helpful comments of Tom Michl and Willi Semmler.
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© 1992 Dimitri B. Papadimitriou
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Wolff, E.N., Dollar, D. (1992). Profit and Wage Convergence and Capital Accumulation Among Industrialised Countries, 1963–83. In: Profits, Deficits and Instability. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-11786-4_7
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DOI: https://doi.org/10.1007/978-1-349-11786-4_7
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