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- Title
THE CAPITAL MARKET AND INCOME DISTRIBUTION IN YUGOSLAVIA: A THEORETICAL AND EMPIRICAL NOTE.
- Authors
Rivera-Batiz, Francisco L.
- Abstract
This section comments on the article The Capital Market and Income Distribution in Yugoslavia: A Theoretical and Empirical Analysis, by J. Vanek and M. Jovicic published in the August 1975 issue of the Quarterly Journal of Economics. In their article Vanek and Jovicic have analyzed interindustry income differences in Yugoslavia. Their main argument is that in Yugoslavia worker-managed firms accumulate capital and grow mainly by means of their internal savings. This implies that the income per worker of any firm at any moment of time is composed of a pure labor income component and an implicit rental on capital previously accumulated. Oxir main criticism is that you cannot try to decompose income per worker variation into a pure income and a capital intensity-dependent component and still expect the coefficient on the capital-intensity variable to be a shadow price reflecting the scarcity of capital in the economy, as Vanek and Jovicic do. The main point is that capital intensity is correlated with other variables which can explain a large share of income variation in themselves. In a labor-managed market economy there is no labor market in the usual, supply-demand, spot-competitive sense. The existence of a secondary sector in a labor-managed economy is more cloudy, and its presence is possibly smaller than what exists in a capitalist economy. In conclusion, it seems to us that the theoretical underpinnings and the empirical procedures used by Vanek and Jovicic must be modified. We have exposed an alternative model and analyzed it empirically.
- Subjects
YUGOSLAVIA; CAPITAL market; INCOME inequality; CAPITAL gains; SAVINGS
- Publication
Quarterly Journal of Economics, 1980, Vol 94, Issue 1, p179
- ISSN
0033-5533
- Publication type
Article
- DOI
10.2307/1884611