Factor Shares and the Payroll Tax: A Comment
aggregate scrappage rate divided by the rate expected from aging alone (M*t). The coefficient of determination is 0.64, indicating almost two-thirds of the variation of the actual scrappage rate from its trend in explained by changes in turnover and prices. In chart 2, values of the trend (M*tKt) are plotted as a dotted line and values of expected scrappage (St) as a dashed line. The continuous line represents the Polk aggregate observed scrappage values. Correlation of the estimates of the dashed line with the Polk estimates yields a coefficient of determination of 0.90.