A Statistical Equilibrium Approach to the Distribution of Profit Rates

Ellis ScharfenakerGregor Semieniuk
Written By SCEPA

WORKING PAPER

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This working paper builds on Farjoun and Machover's probabilistic approach to understand the distribution of firm level profit rates.

Scharfenaker and Semieniuk use data from 24,000 publicly listed North American firms from 1962-2014 to analyze the profit rate distribution. Their major findings are: profit rates experience a double exponential distribution; the profit rates exhibit structural changes following the 1980s; and Scharfenaker and Semieniuk find that a single constraint can explain derivations from the mean.

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