Munich Personal RePEc Archive

Are Returns to Capital Hitting New Historic Highs?

Tatom, John (2007): Are Returns to Capital Hitting New Historic Highs? Published in: Research Buzz , Vol. 3, No. 5 (31 May 2007): pp. 1-3.

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Some analysts believe that earnings of owners of capital are booming, setting new records. The basis of this view is that corporate profits, both before and after taxes, have been climbing in recent years as a percent of GDP. This has contributed to the view that workers are falling behind as the share of compensation declines, reflecting the rising share going to owners of corporate capital. The difficulty with this conclusion is that corporate profit is not the only payment to owners of capital. Interest, rent and profit of unincorporated business are also payments for the services of capital. This article discusses these components and their relevance to this belief.

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