Income Distribution and a Simple Labor Theory of Value: Empirical Results from Comprehensive International Data

Abstract

This paper presents the results of an empirical exploration of data from countries worldwide. Income distribution, as associated with the system of prices of production, fails to describe many economies. Economies in most countries or regions lie near their wage-rate of profits frontier, when the frontier is drawn with a numeraire in proportions of observed final demands. Labor values predict market prices better than prices of production do. Labor values also predict market prices better than they predict prices of production. A simple labor theory of value is a surprisingly accurate price theory for economies around the world.

Keywords: Income Distribution, Labor Theory of Value, Prices of Production, Sraffian Economics, Input-Output Analysis

JEL Classification: D33, B51, C67