Growth and the Kaldor Facts

Abstract

We revisit the Kaldor growth facts for the United States and the United Kingdom during the postwar period. We find that while overall the original Kaldor facts continue to hold, deviations occurred along several dimensions: Instead of staying constant, the growth rates of real GDP per worker and of real capital per worker have slowed down in the United States and the United Kingdom since the 1970s, the capital-to-output ratio has increased in the United Kingdom, and the share of income paid to labor has decreased in the United States since 1990. We discuss how to calculate the Kaldor facts in multi-sector growth models and establish that a slowdown in GDP-per-worker growth naturally results from secular changes in relative prices.

JEL Classification: O41, O47