Journal Article The Theory of Relative Shares: Comment Get access Frederick W. Bell Frederick W. Bell Federal Reserve Bank of Boston Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 79, Issue 4, November 1965, Pages 671–676, https://doi.org/10.2307/1880661 Published: 01 November 1965

R ECENT labor market analysis has been conducted by two rather distinct groups of economists. Each seems to have neglected the contribution of the other. Solow, Minasian, and Ferguson have explored extensively the impact of regional wage differentials on factor proportions.' Others such as Dunlop, Ross, Kerr, and Thompson have explored wage decision-making in various labor markets with little treatment of the employment effect.2 Empirical evidence will be presented here to support the arguments advanced by each group of labor market analysts. In addition, a possibility of combining the contribution of these groups into a single framework within which to study the impact and behavior of wage differentials will be suggested.

Other calculations show that this conclusion is not particularly sensitive to the choice of bo. However, if the growth of capital per laborer were double or triple what we actually experienced, then, of course, the sensitivity of growth of output to the elasticity of substitution is significant. For example, the U.S.S.R. experienced approximately a 200 per cent increase in capital per man hour over the 1947-1960 period.7 Column 2 of table 1 shows that the effect of this large an increase in capital per man hour is much more sensitive to the elasticity of substitution. But even in this case, compared with the 140 per cent increase in output per man hour actually achieved in the Soviet Union over this period of time, the differences in the predictions of the effects of the growth of capital appear relatively small. The above analysis suggests that while the CES model may have significant advantages over the Cobb-Douglas model for analysis of growth of output in economies where the capital-labor ratio is changing rapidly, for analysis of growth of output in the United States it does not do much that the old Cobb-Douglas model didn't do. The road to improvement in our presently very unsatisfactory growth theory must lie in other directions. ublished data from Richard Moorsteen.

In a recent issue of this Review, Vernon L. Smith advanced a general miiodel of the economiiic aspects of production from natural resources. Unfortunately, Smith makes a nuimber of unsound assumptions and methodological errors in formulating his general model of natural resource exploitation. We shall show, using commilercial fishing as a particular example, that the structure of Smith's model leads to absurd conclusions. In addition, we shall develop the correct specification for the competitive recovery of a fishery resource.