What empirical evidence supports the LTV?
As noted above, the LTV may be a good approximate theory of prices if the price of capital per worker for vertically integrated industries is closer to the average price of capital per worker than for non-vertically integrated industries. Anwar Shaikh has checked this condition with the 1947 input-output table collected by Wassily Leontief for the United States. This input-output table divides the U.S. economy into 190 sectors. Anwar Shaikh found that the ratio of the standard deviation of the capital-labor ratios to the mean capital-labor ratio (the coefficient of variation) is 1.14. The coefficient of variation for capital-labor ratios of vertically integrated sectors is 0.60. So the desired condition is confirmed. Furthermore, 96% of sectoral variations in the logarithm of relative prices are explained by variations in the logarithm of relative labor values. (Anwar Shaikh provided a theoretical argument for using natural logarithms.) Anwar Shaikh also tested the ability of the LTV t
