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| Main Author: | |
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| Format: | Preprint |
| Published: |
2025
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| Subjects: | |
| Online Access: | https://arxiv.org/abs/2509.11538 |
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| _version_ | 1866914414014234624 |
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| author | Lyu, Jiyuan |
| author_facet | Lyu, Jiyuan |
| contents | This paper incorporates fixed capital into a multi-sectoral input-output model to reassess the Okishio Theorem. We establish the existence of a critical wage elasticity strictly less than unity, beyond which cost-reducing technical progress leads to a declining equilibrium rate of profit. This implies that profit rates may fall even under Kaldor's Stylized Facts or a moderately declining labour share, significantly extending the theorem's domain of validity. Game-theoretic analysis reveals a strict Prisoner's Dilemma structure underlying technical adoption. Empirical evidence from Chinese industrial data confirms that fixed capital intensity exerts a significant dampening effect on the profit-enhancing impact of productivity growth. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2509_11538 |
| institution | arXiv |
| publishDate | 2025 |
| record_format | arxiv |
| spellingShingle | The Falling Rate of Profit under Fixed Capital and Stable Labor Shares Lyu, Jiyuan Theoretical Economics This paper incorporates fixed capital into a multi-sectoral input-output model to reassess the Okishio Theorem. We establish the existence of a critical wage elasticity strictly less than unity, beyond which cost-reducing technical progress leads to a declining equilibrium rate of profit. This implies that profit rates may fall even under Kaldor's Stylized Facts or a moderately declining labour share, significantly extending the theorem's domain of validity. Game-theoretic analysis reveals a strict Prisoner's Dilemma structure underlying technical adoption. Empirical evidence from Chinese industrial data confirms that fixed capital intensity exerts a significant dampening effect on the profit-enhancing impact of productivity growth. |
| title | The Falling Rate of Profit under Fixed Capital and Stable Labor Shares |
| topic | Theoretical Economics |
| url | https://arxiv.org/abs/2509.11538 |