Linear Production Function Based Modeling and Estimations of Wages and Profits in S. Korean Economy : Consequential Policies

The introduction of productivity, either in the form of a function of labor productivity or a function of wages in a linear production function (LPF), opens numerous possibilities for the correct estimation of the main parameters of capital and labor prices, as well the capital and labor shares in the national economy. The LPF is also successfully combined with the Cobb–Douglas production function to confirm the estimations of these parameters. In addition, we provide evidence as to why the wage share in the economy has been declining. Several other relations are also generated, such as the constancy of the GDP to capital ratio. Moreover, some related policies are examined regarding wages and profits