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This paper presents an innovative interpretative scheme of the relationship between economic growth and income inequality, taking the primary distribution of income between profits and wages as the main explanatory variable. For that purpose, two lines of research are taken as a reference point: first, the Bhaduri-Marglin Model, which explains grow...
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The existing literature suggests that economic institutions determine the allocation of resources for economic growth. As an important counterexample, although China has one of the world’s fastest-growing economies, its legal and financial systems are underdeveloped. With evidence from China, the author confirms that government intervention positiv...
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... This argument indicates that the increase in labour income share and household income inequality can occur simultaneously. This observation is in contrast with the observations, such as Daudey and García-Peñalosa (2007) and Molero-Simarro (2017), that higher labour income share correlates with a more equal distribution of household income, given that the share of labour income in total household income is higher in poor households with lower income. This contrast justifies the need to further analyse the three-way interaction among measures of income distribution and economic growth simultaneously, which is also recognized by the observation by Franzini and Pianta (2015, p. 9) on the need to analyse the several dimensions of inequality together. ...
... Conversely, an increase in labour income share or Gini coefficient accelerates the per capita GDP growth rate in all three samples. While these patterns might sound different from some of the existing ideas coupling more labour share with less personal inequality (Daudey & García-Peñalosa, 2007;Molero-Simarro, 2017), our empirical analysis also confirm such direct, reinforcing relationship between functional and household income distribution. ...
This study analyses the three‐way relationship between economic growth and the two aspects of income distribution, namely, functional income distribution (labour income share) and household income distribution (Gini coefficient). One contribution of such three‐way analysis is to reveal the ‘decoupling’ pattern of the growth‐equity nexus, namely decoupling between functional income distribution and household income distribution, as it finds that economic growth tends to increase labour income share but worsen household income inequality, and also to confirm the reverse relationship that that higher labour income shares and household income inequality lead to a higher rate of economic growth. We show that these findings co‐exist with the traditional belief in the literature about the directly reinforcing relationship between functional and household income distribution. These findings are consistent with skilled labour compensated by performance‐based higher wages, which is often associated with a skill‐biassed technological change. The study confirms the same three‐way relationship in both developed and developing countries, but with several different determinants and different trends in the key variables. Given this nuanced trade‐off between economic growth and household income equality, coupled with no such trade‐off between growth and labour income share, a sensible policy prescription may be a combination of growth‐enhancing policy of increasing pre‐tax labour income share and a separate redistribution policy to decrease disposable household income inequality, which can mitigate income inequality without harming economic growth.
... They argue that their decisions and their preferences depend on power relationships and the social classes to which they belong and the ones to which they aspire to belong (Hanmer and Akramb-Lodhi 1996). Power dynamics between classes and the resulting inequalities are central to any analysis (Seguino 2020;Braunstein et al 2020;Molero-Simarro 2017;Van Staveren 2010;Bhaduri and Marglin 1990). This is the opposite of cultural endogenous growth theories, which regard firms and consumers as isolated and identical atoms who act purely according to their self-interest and independently of their social class or the social groups to which they belong. ...
In the last years, there has been an emergence of cultural-led development studies. On the one hand, there are studies that explore how culture contributes to regional economic regeneration and to job creation. On the other hand, recent works analyse from a supply-side perspective the complementary relationship between cultural capital and human capital in fostering national economic growth. This paper contributes to this last strand of the literature by analysing how the degree of inequalities in cultural engagement impact on economic growth. The argument is that cultural capital might be more effective in driving economic growth when there are higher rates of cultural engagement across social groups because more people can become inspired to be creative and innovative and because diversity is a source of innovativeness. To justify it, the article deploys a novel approach that combines cultural economics literature with post-Keynesian economics. Their fertile dialogue enables the consideration of power relationships and inequalities. It also furthers the understanding of the role of external demand in shaping economic growth by considering the differences in countries’ productive structure. Hence, a post-Keynesian growth model is adapted to embed inequalities in cultural engagement. Considering the role of the balance of payments constraint on long-run economic growth, the model is applied to different types of productive structures that differ in the uniqueness and diversification of their knowledge networks. The article concludes that higher cultural engagement fosters economic growth and that the size of this effect is stronger and more durable in more complex economies.
... 22 Our theoretical prediction is greatly supported by empirical evidence of the causality between output growth and income inequality (e.g. Molero-Simarro, 2017) ...
We investigate the effects of the gap between the rate of return on wealth and the growth rate, r − g, on wealth inequality using a model of inherited wealth and productivity inheritance featuring heterogeneity in labor income and in the death rate. The heterogeneity in the death rate implies different health types, which imply type dependence and scale dependence. Labor income heterogeneity implies a U-shaped effect of r − g on wealth inequality. Long-run wealth inequality increases in r − g if the distribution of the death rate features good-health types and if r − g is sufficiently larger than a positive threshold, which is increasing the dispersion of labor income. The share of good-health types and the r − g’s threshold in the Survey of Consumer Finances are 31.8% and 4.5%, respectively.
... As contended by some authors (Lavoie and Stockhammer 2012;Molero-Simarro 2016), if labor share declined in an essentially wage-led regime, the economy's growth would fall into stagnation due to insufficient demand, unless it relied on some external stimuluses. This rationality explains the debt-driven and export-driven growth models pursued by the developed countries in neoliberalism era which led to the financial crisis (Hein 2013;Hein and Truger 2012;Stockhammer and Wildauer 2016). ...
This paper estimates China’s growth regime based on Bhaduri-Marglin model, using the provincial panel data from 1978 to 2017. It contributes to related empirical studies in that: (1) it tests that the responsiveness of investment growth to labor share increase is dependent on the existed labor share level; (2) it uses the labor share changes adjusted for the sectoral-change effects as a more appropriate proxy for distributive changes; and (3) it manifests the necessity of recognizing regional heterogeneity in parameters for a large economy. The results show that at 2017 level, whereas the eastern area is weakly profit-led, the inland area is strongly wage-led, and an even increase of labor share in all areas lead to more rapid growth of the whole economy. At this stage, China needs pro-labor institutional reforms to restore rapid, balanced, and sustainable growth.
... Following Kuznets (1955), the relationship between inequality and growth has been subject to intense debate in the existing literature (Binatli 2012, Naguib, 2017Molero-Simarro, 2017, World Bank , 2016 for recent surveys). The findings are ambiguous. ...
This paper examines economic growth, structural change and poverty reduction linkages across 147 countries of the world during 1991-2015. It emphasises that under the liberal market growth model structural change-growth linkages are complex, which in turn can complicate the poverty reduction effects of growth. It proposes a conceptual framework to explain how growth and structural dynamics have been influenced by globalisation. It argues that at the core of the conventional growth-structural change relationship lies the assumption that economic activities within and across sectors are strongly connected with each other through forward and backward linkages. Globalisation may distort this connectedness affecting different sectors asymmetrically. As a result, structural change in value added and employment may not commensurate with each other exerting ambiguous effects on cross-sector productivity dispersions. The study hypothesises that the convergence between them is critical for productivity enhancing structural change, and in turn, for poverty reducing effects of growth. The generalised method of moments (GMM) estimator within the framework of a dynamic panel data approach upholds the hypothesis. These findings question the sustainability of the growth and structural change processes taking place in the developing world and call for deeper strategic government interventions for broad based economic development with an emphasis on manufacturing.
... Income distribution determines the accumulation process and, therefore, it can be considered the engine of economic growth (Molero-Simarro 2017). Piketty (2014) considers that income inequalities have an increasing tendency due to the faster growth of wealth in comparison to economic output. ...
Economic history conducting investigations into financial crises of the long 20th century primarily analyses the permanent character of crises and their macroeconomic consequences. Statistics focuses, primarily, on the number of bank failures, corporate bankruptcies, low macroeconomic output (gross domestic product [GDP]), decreased employment rates as well as increased inflation and government debts. Both economic history and statistics only deal with the decrease in household income and with losses in their net wealth positions afterwards. The authors of this study investigate the impact of the 2008 crisis on household income and their net wealth positions. They also examine options of restoring household income in Visegrad countries based on the data of NUTS 2 level (Nomenclature des unités territoriales statistiques) territorial units. The authors have used empirical analysis and statistical comparison for the change of the income and wealth situation of the Visegrad countries’ households. The results show that in the 2000s, the growth in the income gap between households slowed down, but after the crisis of 2008, the differentiation of the wealth of households in the region continued. As a result of this crisis, the income differences also started to rise again, which led to even wider gaps in income inequalities. Recovery of income and wealth has begun, but it will take at least 3-4 years to reach the pace of pre-crisis growth. In addition, its level could be permanently lower since households and credit institutions behave more cautiously than before the crisis.
Artykuł ma na celu ustalenie wpływu fluktuacji wskaźników makroekonomicznych na skłonności inwestycyjne przedsiębiorstw, mierzone wskaźnikiem intensywności inwestycji – zdefiniowanym jako stosunek wydatków inwestycyjnych do całkowitych przychodów. Analiza obejmuje pięć sektorów przemysłu przetwórczego w Polsce (według Klasyfikacji Działalności PKD) generujących największe przychody. Wykorzystując niepublikowane panelowe dane kwartalne GUS z lat 2008–2022 pochodzące z badań F-01 i F-02, w badaniu skoncentrowano się na średnich i dużych przedsiębiorstwach. Zastosowanie analizy kointegracji oraz modelu wektorowej korekty błędu (VECM) pozwala na określenie wskaźników makroekonomicznych, które trwale wpływają na skłonności inwestycyjne w poszczególnych sektorach. Badanie pozwoliło również stwierdzić sezonowość inwestycji w tych sektorach, ujawnić głęboką długoterminową korelację między inwestycjami korporacyjnymi a wskaźnikami makroekonomicznymi oraz uchwycić zarówno trwałe równowagi, jak i przejściowe fluktuacje. Co istotne dowiedziono w nim zróżnicowany wpływ makroekonomii na decyzje inwestycyjne z PKB i SP jako kluczowymi elementami w sektorze chemicznym (PKD-20) oraz to, że dynamika czasowa i międzysektorowa wyraźnie wpływa na sektor komputerów i elektroniki (PKD-26). Te spostrzeżenia dowodzą złożoności efektów makroekonomicznych w kontekście strategii inwestycyjnych funkcjonujących w ramach przemysłowej struktury Polski.
This paper aims to answer two questions: (1) Does overtourism incline countries to favorise the capital asset holder instead of workers in income distribution? (2) Does income inequality come hand in hand with overtourism? Employing Kaldor's theory of income distribution, this study adapts its theoretical framework to assess countries with a specialization in tourism. The analysis encompasses data from 115 developed countries over the period of 2000 to 2019. A Regression Discontinuity Design (RDD) methodology is utilized for the empirical investigation, categorizing key variables based on the exposure of a country's unit to a tourism-focused developmental strategy. The study reveals that adopting overtourism as a developmental strategy has led to increased inequality, characterized by a rising capital share and a declining labor share over time. Evidence supporting these findings is presented through both parametric and non-parametric Regression Discontinuity Design (RDD) analyses. Robustness checks and placebo tests corroborate these results.
Purpose
The first objective of this article is to analyse the reasons to pursue inclusive growth, that is economic growth accompanied by a reduction of social inequalities in different dimensions. The second objective of the article is to develop a systematised framework to understand the different channels and enablers by which heritage can contribute to inclusive growth through a review of specialised literature.
Design/methodology/approach
The methodology of this article is based on an exhaustive review of existing literature around models of economic development and their ability to decrease social inequalities. It critically reviews theoretical and empirical studies on existing economic approaches and links them with the heritage policy field.
Findings
The article finds that countries should pursue inclusive development since it is a fundamental condition for social cohesion, trust and society's overall well-being and because it enables economic growth to be sustainable through time. It also identifies four channels through which heritage can contribute to inclusive development: in its public good dimension, in its capacity to equalise opportunities, in its ability to reduce social, educational and health disparities and in its capacity to decrease spatial income inequalities through regeneration processes.
Research limitations/implications
The framework, that is developed to categorise the different channels and enablers through which heritage could contribute to inclusive growth, is not empirically tested. Further research could approach this by estimating a difference in difference model. However, data limitations could limit this objective in the short-term.
Originality/value
Its originality relies in the development of a conceptual framework that is aimed at shaping heritage policies that target, at the same time, the reduction of inequalities and economic growth.
