Abstract
This paper investigates the relationship between the rate of profit and technical change using a two-commodity model of growth in which the economy-wide profit share is assumed to be constant. To be more precise, we show how aggregate labor productivity and aggregate capital productivity vary as a result of sectoral technical change, and examine the relationship between the rate of profit and changes in the aggregate productivity. We argue the significance of structural change and the resultant change in relative prices as factors that influence the rate of profit.
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