Moraitis & Basu, ‘Deciphering the Drivers of Price-Labor Value Vector Proximity in Empirical Studies’
June 20, 2026
Abstract
In the tradition of Classical Political Economy, empirical studies of labor values and prices ask whether labor-value vectors are close to observed market-price vectors. This paper examines the mechanisms that generate such proximity in input-output systems by uncovering the structural features of the linear production system determining the relevant distance. We use the recent critique of Shaikh-style price-value comparisons by Sabatino (2026) as a springboard for this analysis, by deciphering the results she obtains from different artificial datasets. The central result is that, under the direct-price construction examined here, the distance is governed by the dispersion of reciprocal vertically integrated labor coefficients. This shifts attention to the determinants of the vector of vertically integrated labor coefficients: the dispersion of the direct labor vector, the column structure of the Leontief inverse, and the spectral radius of the input-output matrix. The analysis shows that low market price-labor value distance can arise from identifiable structural mechanisms within the production system.
Citation
Deciphering the Drivers of Price-Labor Value Vector Proximity in Empirical Studies
Moraitis, Thanos and Basu, Deepankar. (2026). University of Massachusetts Amherst Working Papers. 18 May. pp. 1-35.