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Why Does Profitability Fall? Paradoxes of Capital Composition and Labor Productivity

  • Juan Pablo Mateo ToméEmail author
Chapter

Abstract

In this chapter the determinants of the fall in profitability are analyzed from an in-depth study of the dynamics of capital accumulation, for which the author focuses on the sphere of production technology. The Spanish economy offers an atypical behavior: surprisingly, the ratios of both the composition of capital and labor productivity evolve just the opposite of what any economist would expect, and furthermore, there are features typical of a peripheral economy. The analysis nevertheless reveals the importance of capital productivity underlying the fall in the profit rate. To explain these particularities, the author shows that it is necessary to go further, since only considering the most dynamic sectors associated with the housing boom, it is then possible to explain this paradoxical macroeconomic behavior.

Keywords

Capital Productivity Prices Economic structure Employment 

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Copyright information

© The Author(s) 2019

Authors and Affiliations

  1. 1.University of ValladolidSegoviaSpain

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