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... 2 Crescimento e desigualdade A inter-rela9ao entre crescimento e distribui9ao de renda tern uma longa tradi9ao teorica, que remonta aos tempos de Ricardo e Marx. 2 Nos anos 50 do seculo XX essa tradi9ao foi cristalizada, por exemplo, nos trabalhos de Kaldor (1956Kaldor ( , 1957, sempre utilizando o conceito de distribui9ao funcional da renda. Ja nos modelos da teoria neoclassica gerados na mesma epoca -dos quais Solow (1956) e a referenda principal -nao havia lugar para a distribui9ao de renda: os modelos originados a partir do seu seminal trabalho tratavam agregativamente os agentes economicos em termos de um "agente representativo", desconsiderando aspectos distributivos. ...
... 2 Crescimento e desigualdade A inter-rela9ao entre crescimento e distribui9ao de renda tern uma longa tradi9ao teorica, que remonta aos tempos de Ricardo e Marx. 2 Nos anos 50 do seculo XX essa tradi9ao foi cristalizada, por exemplo, nos trabalhos de Kaldor (1956Kaldor ( , 1957, sempre utilizando o conceito de distribui9ao funcional da renda. Ja nos modelos da teoria neoclassica gerados na mesma epoca -dos quais Solow (1956) e a referenda principal -nao havia lugar para a distribui9ao de renda: os modelos originados a partir do seu seminal trabalho tratavam agregativamente os agentes economicos em termos de um "agente representativo", desconsiderando aspectos distributivos. ...
The present survey deals with a selection of issues related to the themes of economic growth, income inequality and the role of education in both growth enhancing and inequality reduction. It has three main constraints: (i) although containing references to the international experience, it is heavily focused on the Brazilian case; (ii) it deals mainly with applied (i.e., empirically oriented) studies; (iii) it does not explore all the interrelationships that simultaneously occur between growth, inequality and education.
... Dechert (1984) showed that Day's (1982) ad-hoc savings function, as well as any other savings function leading to cyclical or irregular fluctuations, is, unfortunately, inconsistent with inter-temporal utility maximisation in an optimal growth framework. However, following on from Kaldor (1956Kaldor ( , 1957 , introducing constant but different savings propensities out of capital and labour income, Böhm & Kaas (2000) were able to obtain savings behaviour that leads to complex growth paths. They proved that topological chaos in the sense of Li & Yorke (1975) may arise if savings propensities differ slightly and the distribution of income varies sufficiently. ...
... They proved that topological chaos in the sense of Li & Yorke (1975) may arise if savings propensities differ slightly and the distribution of income varies sufficiently. Meyer (2003) and Commendatore (2005) showed that these results carry over to Pasinetti's (1962) modification of Kaldor's (1956) growth model, while Schmitz (2003) showed that these phenomena also occur in a two-sector growth model with differential savings. Uzawa (1961Uzawa ( , 1963, Inada (1963), and Drandakis (1963) developed a two-sector extension of the Solow-Swan model. ...
... se pasa de un tipo de Estado nacional de competencia (Hirsch, 1999) a una lógica más asimilable al vigente en el período de la posguerra del siglo anterior, sustentado sobre un modelo de alianza de clases y un tipo de economía que se aparta del laissez faire y propone una economía mixta (Mattick, 1969) en la que el gobierno interviene, regula y participa más activamente. 3 Retoma el discurso peronista de justicia social bajo una lógica económica de corte keynesiana que justifica la intervención del estado en la economía para regular los ciclos (Keynes, 2014) y propender al crecimiento (Harrod, 1939;domar, 1946;Kaldor, 1955;thirlwall, 2003;Bresser-pereira y Gala, 2010). posicionamientos que luego van ganando fuerza bajo las presidencias de néstor Kirchner (2003Kirchner ( -2007 y cristina Fernández de Kirchner (2007. ...
... si bien es un tipo de modelo que no pretende plantear un cambio en las relaciones de propiedad en general, la política distribucionista del kirchnerismo traspasó las fronteras permitidas por el capital. Los incrementos salariales más allá de los incrementos de productividad vulneraron la regla de oro de la economía mixta del capitalismo moderno planteada por el modelo de distribución de Kaldor (1955), emblema también del desarrollismo (Frigerio, 1963) y el neodesarrollismo (curia, 2007;Bresser-pereira y Gala, 2010). así, el discurso hegemónico dominante, impulsado por los grupos económicos concentrados (transnacionales, sector financiero, agroexportadores) y seguido por los sectores medios urbanos, levantó las banderas de la regulación de la economía mixta como un lastre al pleno desarrollo de los individuos. ...
En el presente trabajo se propone analizar la dinámica de acumulación del capital en Argentina durante el período de la posconvertibilidad (2002/3-2015). El trabajo se centra en el análisis de las condiciones de valorización del capital a partir de la evolución de la tasa general de ganancia (TGG) a los efectos de comprender, tanto la dinámica de acumulación del capital, como las tensiones y contradicciones del proceso social de una economía mixta y distribucionista.
Palabras clave: tasa general de ganancia, posconvertibilidad, acumulación de capital, economía argentina.
... Previous studies converge in the negative relationship between economic growth and inequality in the early stages of development. More recent research has shown that this relationship can be negative or positive depending on the level of development of the country (Lewis, 1954, Kuznets, 1955and Kaldor, 1955. Specifically, these studies have shown that inequality has a potential increasing effect of economic growth on income inequality in the early stages of economic development and a decreasing effect in later stages (Kaldor, 1955;Kuznets, 1955;Lewis, 1954). ...
... More recent research has shown that this relationship can be negative or positive depending on the level of development of the country (Lewis, 1954, Kuznets, 1955and Kaldor, 1955. Specifically, these studies have shown that inequality has a potential increasing effect of economic growth on income inequality in the early stages of economic development and a decreasing effect in later stages (Kaldor, 1955;Kuznets, 1955;Lewis, 1954). ...
the relationship between inequality and economic growth and international economy is one of the most studied topics and is seen as a major problem to be solved. what is new is that researchers and policy makers have shifted their attention from conventional inequality at a single mean coefficient to divisible inequality at levels of its value. In this context, our article contributes to examine the link between inequality and economic growth by taking into account the international economic relations of three panels of countries grouped according to their income levels during the period 1990 to 2020.
The study used an econometric quantile regression model (Method of moments quantile regression) to examine these variables at different levels of inequality. The estimates for quantiles 0.05 to 0.95 in 135 countries yielded the following findings: The empirical results showed heterogeneous effects of the international economy, economic growth and financial development on inequalities between different quantiles in each country of the three panels (HIC, MIC, LIC).Our findings have several implications and offer valuable insights for policy makers to address inequality based on financial development or/and economic growth or/and international economic variables
... An alternative perspective has considered the impact of income disparity on economic growth. Classical economists argued that income disparity boosts post-industrial growth by increasing marginal saving, leading to higher savings, investment, and production (Kaldor 1955). Solow (1956) suggested that emerging countries will grow faster than industrialized ones due to diminishing returns on capital. ...
Single-country studies on the relationship between economic freedom, income disparity, and economic growth are rare, especially investigations on developed economies. This research examines the case of Greece using the nonlinear autoregressive distributed lag (NARDL) method and the Toda-Yamamoto causality test. The findings suggest that prioritizing economic freedom as a long-term goal can reduce income inequality, but per capita income growth promotes equality faster in the medium term. Asymmetric results indicate only positive changes in the impact of economic freedom on income equality in the long run. Additionally, the findings suggest that income inequality negatively affects per capita income in both the short and long term. A rise in the Economic Freedom Index has a negative medium-term impact on Greece's growth but can drive long-term growth. Notably, positive changes in economic freedom increase per capita income, while negative changes decrease it, with negative shocks having a greater destabilizing effect. The main implication that constantly emerges from our empirical investigation is that, in countries where economic freedom is below a certain threshold, even minor reforms promoting economic freedom can effectively reduce income disparity and foster economic growth after an intermediate period.
... Numerous transmission mechanisms connecting economic inequality to economic growth have been uncovered by theoretical investigations. Proponents of inequality's growth-promoting effects, such as Kaldor (1955), and Kalecki (1971), argue that inequality stimulates capital accumulation, propelling economic growth. Additionally, this line of reasoning is supported by the notion that income disparity incentivizes individuals to enhance their productivity through education, financial risk-taking, and migration to more productive sectors (Bradbury & Triest, 2016;Cingano, 2014;Katz, 1986). ...
In recent years, the issue of increasing economic inequality in both advanced and emerging economies has garnered considerable focus, sparking numerous debates in economic and political circles. At the heart of social science inquiries is the critical question of whether economic inequality acts as a catalyst for or an obstacle to economic growth. This study explores the impact of wealth inequality on economic growth considering heterogeneity of the countries. Utilizing advanced datasets and cutting-edge machine learning techniques to address the nonlinear dynamics of this relationship, our analysis provides a nuanced departure from traditional panel data models. Our findings indicate that the impact of wealth inequality on economic growth is heterogeneous, contingent upon a country’s economic structure and existing level of inequality. Specifically, while a moderate level of inequality may stimulate growth in developed and pre-communist countries, it tends to impede growth in developing and underdeveloped countries with higher degrees of economic inequality. Our research further elucidates the presence of an inverted U-shaped relationship between wealth inequality and growth, identifying an optimal inequality threshold beyond which the adverse effects—such as diminished access to education and increased social unrest—surpass the potential benefits.
... Muitas vezes se confunde a mensuração do grau de monopólio com sua determinação, o que leva à conclusão de que a formulação kaleckiana seria tautológica. (vejaKaldor, 1956e Ferguson, 1971. ...
The excluding characteristics of the capitalist development model in Latin America can be manifested in two main factors: low levels of wages, which force workers to live in poverty, and the marginalization of a part of the population who cannot even match the level of wage from workers. This paper has the intention to analyze the evolution of in the industrial sector in Brazil in light of such facts.
KEYWORDS: Industrialization; employment; wage level; poverty; economic growth
... According to some economic theories, the higher savings ratio for higherincome earners and the importance of investments for growth mean that increased inequality is beneficial for growth (e.g., Kaldor 1955;Bourguignon 1981). However, capital is going to be channeled to the sectors of the economy where the rate of return is the highest. ...
Differences in the quality, size and location of people’s homes are often linked to differences in individuals’ economic preconditions. This is known as housing inequality. It is reasonable to assume that the link between housing accessibility and individual income becomes stronger the more the provision of housing is based on free market forces. Yet, this article argues that it’s a mistake to describe these market forces as free. They are a result of a legal institutional framework that set the market forces in motion. Furthermore, market forces are not only a result of law; they also affect law. Thus, legal and material processes affect each other. The article presents a model for analyzing how legal and material processes contribute to housing inequality. The collection of regulations that enable, enhance, or counteract these forces is what I call the law of housing inequality.
... Where is a scaling parameter. 11 We implicitly assume that capital income is mostly concentrated at the top of the personal income distribution (Ranaldi, 2022) and that the propensity to consume out of income is decreasing in the relative income (Kaldor, 1955;Duesenberry, 1962;Dynan et al., 2004). ...
... The profit-led/wage-led definition was coined byTaylor (1991); the meaning is comparable to the terms inBhaduri and Marglin (1990), exhilarationist/stagnationist, respectively. 3Kaldor (1956) hypothesized that an economy needs to shift distribution in favor of capitalists during the booming period, so they can have sufficient funds to make investments in the following period. Marx, on the other hand, emphasized the role of the reserve army of unemployed, which makes labor's bargaining power, and thus the real wage, vary procyclically. ...
The neoliberal reforms since the 1980s have resulted in rapid globalization paralleled by worsening income distribution. In this paper, I first show that most countries worldwide (58 of 81) have experienced a decline in the labor share of income, or the wage share, during 1950-2019. Second, I estimate the demand and distributive regimes from 81-country panel data based on the neo-Goodwinian model. At the global level, the short-run estimation shows that the distributive regime appears to be Marxian/profit-squeeze and the demand regime exhibits profit-led. I further separate the estimation into two groups: advanced and developing countries. The estimation still confirms the profit-led/profit-squeeze regimes in both groups, even though the demand and distributive regimes are stronger in advanced economies. In the long run, the results reveal a global race to the bottom: a decline in the long-run wage share. Neither positive nor negative gain is founded on capacity utilization in advanced and developing countries.
... This perspective, characterizing inflation as a "conflict phenomenon," is deeply rooted in the traditions of Keynesian and post-Keynesian economics, dating back to the seminal works of Kalecki (1954); Kaldor (1955Kaldor ( , 1957, and Robinson (1952), and subsequently advanced by scholars such as Kalecki (1971); Rowthorn (1977); Marglin (1984), and Dutt (1987) among others. 1 Recent contributions to the literature on conflict inflation include work by Hein (2006); Lavoie (2006); Stockhammer (2008); Hein and Stockhammer (2009) ;Setterfield (2009Setterfield ( , 2023 who share the broader post-Keynesian perspective and also Lorenzoni and Werning (2023) who use a New Keynesian framework. ...
In recent times, the notion that inflation may be the result of conflicting claims by workers and capitalists over the distribution of income has experienced a revival in the academic and policy debate. Against this background, we investigate in this paper the macrodynamics of conflict inflation without and with the additional influence of the political sphere in an extended version of the baseline model of behavioral political cycles proposed by Galí (J Econ Behav Organ 212:50–67, 2023). By means of numerical simulations, we illustrate the reaction of main macroeconomic variables to the emergence of conflicting claims over the distribution of income between workers and capitalists, as well as their possible effects at the political sphere.
... The topic is of interest to policy makers with the emergence of the concepts of social cohesion and inclusive growth and development. The first studies (Lewis, 1954;Kuznets,1955;Kaldor, 1956;Sollow, 1956) suggest that income inequality is generated by the economic development level and in the first stages of economic development, income inequality increases, and after a certain level of economic development, the effect is reverses (Kuznets' inverted U-shaped curve). The studies on the relationship between income inequality and economic growth can be divided into four categories, revealing: (1) a negative correlation; (2) a positive correlation; ...
The rising income inequality around the world and its persistence represent a social phenomenon raising concerns at all levels (global, regional and country) for governments and pose huge challenges to master it and to identify effective solutions. The aim of the paper is to provide a comparative insight at the European Union (EU) level involving 25 Member States regarding the interplay between income inequality, economic growth, and institutional quality. Gini Index sourced from World Income Inequality Database, GDP per capita series extracted from the World Bank database, and institutional indicators collected from the World Governance Indicators database represent the examined variables over the period 1990-2022. Their dynamic is comparatively analysed and discussed. The clustering method is applied to identify similarities and differences between European Union countries in terms of the interplay between income inequality, economic growth and institutional factors and to draw relevant conclusions for future effective policy measures meant to reduce inequality and to boost economic growth. The clustering analysis based on the average growth rate of income inequality and per capita GDP revealed that European Union countries are differently facing the challenge of income inequality rising. Six groups of countries with similar paths regarding the income inequality and economic growth were identified. High-income countries face low levels of income inequality but with an upward trend. Economic growth is accompanied with high levels and increasing levels of income inequality. The institutional quality level may strength the capacity of a country to address the problem of rising income inequality, but it remains unclear the interplay of institutional quality dynamic in reducing income inequality. The implications of the paper’s findings are framed in the context of the European policies.
... The first concerned marginal productivity income distribution theory, based on the Neoclassical production function. That fracture emerged out of the capital controversy launched by Joan Robinson (1953/1954), and Kaldor (1955 transposed that issue into macroeconomics with his theory of functional income distribution. A second fracture, emphasized by Robinson, was over the equilibrium-based IS-LM interpretation of Keynes advanced by John Hicks, which famously provided a short-hand guide to the effects of monetary and fiscal policy while relegating to the background Keynes's concern with the volatility of profit expectations and the marginal efficiency of capital. ...
Paul Davidson was a critical figure in the preservation of John Maynard Keynes’s ideas, sticking with them when they were out of fashion. He was also key to the survival of the Post Keynesian school. Davidson endorsed Keynes’s liquidity preference theory of interest, and he emphasized fundamental uncertainty as a central feature of economic reality, essential to making sense of a monetary economy. His greatest legacy is the Journal of Post Keynesian Economics, the intellectual home for a generation of Post Keynesian economists. Without his efforts, the heterodox economics community would be significantly smaller than it is now.
... shift from labour income to dividend income, which is disproportionately saved rather than spent 169(Kaldor, 1955; Bhaduri and Marglin, 1990;Dynan et al., 2004;Dutt, 2017). The final effect is a lack 170 of aggregate demand, leading to low employment and output.As a result of cost pass-through, 5 an energy price surge induced by a rise in carbon prices is always 172 inflationary on impact. ...
Although the case for a swift climate transition is clear, its macro-financial viability remains uncertain. To shed light on the macroeconomic and financial response to deep mitigation trajectories controlled by carbon pricing, we integrate a process-based integrated assessment model into a macroeconomic agent-based model. The hybrid framework allows translating energy systems transformations into macro-financial outcomes at business cycle frequency and volatility. The results reveal that rapid transitions induced by fast-growing carbon prices significantly impact unemployment, inflation, and income distribution. Stabilization policies reduce these economic fluctuations, though not completely so in 1.5°C compatible scenarios. Our paper emphasizes the need for coordinating climate and macroeconomic policy during decarbonization. Additionally, it showcases how model integration can lead to a better understanding of the economic implications of low-carbon futures.
... Since classical economics adopted profit maximization as the purpose of business, this approach has continued to evolve over the years (Schumpeter, 1934;Keynes, 1936;Tucker, 1960;Harris, 1988). Following the era of classical economics, researchers from various economic schools modified the concept of profit to create alternative objectives and measures (Kaldor, 1956;Pasinetti, 1960;Harris, 1981). ...
... Section 5 will summarise and conclude. The first strand of post-Keynesian theories of inflation goes back to Keynes (1930Keynes ( , 1936, Kaldor (1955Kaldor ( /56, 1957 and Robinson (1956Robinson ( , 1962, and has then been modelled in Marglin's (1984) synthesis of Keynesian and Marxian elements in the theory of distribution and growth. It is assumed that firms operate at the normal or target rate of utilisation of productive capacities given by the capital stock and that changes in demand thus trigger changes in prices. ...
This paper reviews the post-Keynesian theory of inflation against the background of the simultaneous rise in inflation and profit shares in the course of the COVID-19 recovery and the Russian war in Ukraine. It distinguishes between the Keynes, Kaldor, Robinson, and Marglin tradition, and the Kalecki, Rowthorn, and Dutt tradition. Two prototype models in the latter tradition — the Dutt, Blecker–Setterfield and Lavoie variant, and the Rowthorn and Hein–Stockhammer variant — are discussed. The paper applies the latter to elucidate recent inflation trends propelled by increasing imported energy prices and then rising mark-ups. The effects of inflation-targeting central bank interest policies versus a post-Keynesian alternative macroeconomic policy approach are evaluated. It is argued that from a post-Keynesian perspective inflation is always and everywhere a conflict phenomenon , with different potential triggers. Adequate policies should thus focus on moderating distribution conflict by incomes policies, complemented by central banks targeting low long-term real interest rates, functional finance fiscal policies and international coordination of inflation targets.
... The positive effects of economic growth on extreme poverty reduction are at the basis of the alleged trickle-down theory which emerged in the 1950s. It theorizes that the benefits of economic expansion will trickle-down and automatically eliminate poverty (Kuznets, 1955;Kaldor, 1956). Today, the stance around the role of economic growth on extreme poverty reduction is not the same as it was in 1950s, 1960s, or even the 1970s. ...
This study is concerned with both the interlinks between inequality, extreme poverty reduction, and economic growth and estimates the dampening impact on economic growth and on extreme poverty rates using the Central American countries annualized level data. These dynamic complexities, are analyzed within the auto regressive distributed lag bounds testing approach to cointegration. The results show that when extreme poverty reduction is decomposed into two separate impacts, the growth impact on poverty reduction was lessened by the incidence of high-income inequality. The total dampening impact of inequality, varies from 1.1522% for El Salvador to 2.0589% for Honduras, due to a 1% increase in inequality. Reducing inequalities can be doubly beneficial for the extreme poor in Central American countries. The magnitude of changes in poverty reduction depends on each country-specifics, which leads to the implementation of a different strategy for extreme poverty reduction to different countries
... The relationship between inequality and growth has been studied for decades. The works of [32] and [33] are milestones on the subject. 2 Previous empirical research is not conclusive about the positive [37], [38] or negative sign [39], [40], [41], [42] of this relationship. Banerjee and Duflo [43] stated that changes in inequality are what diminish economic growth. ...
In this article, we apply an agent-based stock-flow consistent model (AB-SFC) to analyze economic growth differences when establishing different types of taxes on personal income: proportional and progressive. We use an income tax design that distinguishes between two sections of income. We contribute to the prominent literature on macro agent-based models by providing an unexplored feature in the income tax scheme. Our main findings are that this tax design seems to offset the inequality through tax exemption for low-income households but seems to have a limited impact on inequality generated between middle and high-income households. Notably, we did not find evidence of a deterioration in economic growth in the presence of a progressive income tax instead of a proportional one. Therefore, this article proposes a scenario where changing the tax scheme reduces inequality without hampering growth. This result has important implications for policy.
... In these tumultuous 10 years, seven prime ministers have shared the office.4 We are aware of the criticism levelled by economists (chieflyKaldor 1955, and others like Whitman 1941) and accept that Kalecki's degree of monopoly suffers from some of these issues. However, we believe it is an important, even irreplaceable method to understand the changing nature of industrial capital and its implications for workers' share. ...
The present study is an attempt to examine the development of monopoly capitalism in India through industry-level analysis of the change in the degree of monopoly and distribution of income. To this end, the Kaleckian approach has been applied to all the 56 three-digit Indian organised manufacturing industries listed in the Annual Survey of Industries covering the period 1998-2018. The data have been examined at four levels: the aggregate sectoral level, the aggregate of the top 25 per cent industries, the aggregate of the top 10 per cent and disaggregate analysis of the top 6 industries. The study finds strong evidence of the growth of monopoly power in the manufacturing sector with the rising growth rate of the economy, indicating the rise of monopoly capitalism in India. It also brings out the dominance of the top 25 and top 10 per cent (in terms of gross value added [GVA] share and employment) manufacturing industries) in the determination of aggregate monopoly power and the wage share in the organised manufacturing sector. The study finds that under monopoly capitalism, the rise of profits of the larger industries in India's organised manufacturing sector primarily comes from the deduction of wages of production workers and the flow of surplus from smaller to larger industries. Keywords Degree of monopoly · Kalecki · Labour share · Capitalist share · India · Monopoly Capitalism JEL Classification D3 · E11 · L12 · L6 Since its formal integration with the accumulation logic of global capitalism in 1991, the Indian economy has been changing rapidly. In the last three decades, several
... Note that households' wealth is held exclusively in the form of bank deposits. 14 We implicitly assume that capital income is mostly concentrated at the the top of the personal income distribution(Ranaldi, 2022) and that the propensity to consume out of income is decreasing in the relative income(Kaldor, 1955;Duesenberry, 1962;Dynan et al., 2004). ...
The paper introduces an integrated approach, blending Opinion Dynamics with a Macroeconomic Agent-Based Model (OD-MABM). It aims to explore the co-evolution of climate change mitigation policy and public support. The OD-MABM links a novel opinion dynamics model that is calibrated for European countries using panel survey data to the Dystopian Schumpeter meeting Keynes model (DSK). Opinion dynamics regarding stringent climate policy arise from complex interactions among social, political, economic and climate systems where a household's opinion is affected by individual economic conditions, perception of climate change, industry-led (mis-)information and social influence. We examine 133 policy pathways in the EU, integrating various carbon tax schemes and revenue recycling mechanisms. Our findings reveal that while effective carbon tax policies initially lead to a decline in public support due to substantial macroeconomic transition costs, they concurrently drive a positive social tipping point in the future. This shift stems from the evolving economic and political influence associated with the fossil fuel-based industry, gradually diminishing as the transition unfolds. Second, hybrid revenue recycling strategies that combine green subsidies with climate dividends successfully address this intertemporal tradeoff, broadening public support right from the introduction of the carbon tax.
... Then, Marx (1867) emphasized how this unequal allocation had consequences in the distribution of income of the subjects of production, and ultimately among social classes. The problems of income and wealth distribution continued to be analyzed in the 20 th century, through contributions by Keynes (1936) and Kaldor (1956), and in the 21 st century, through the studies of Atkinson (2015), Milanovic (2016), Piketty (2015) and Stiglitz (2013). Indeed, the topic has become particularly relevant in developed countries, where the middle class, primary bearers of the consequences of globalizations have exerted growing political pressure. ...
In this article, the concept of gravitational fields applied to trade is revisited and extended to multiple economic variables, integrated within Moran’s I analysis. Following Isard’s thinking, emphasis is placed on the use of the gravitational model in spatial analysis, with the intent of theoretically developing an econophysical methodology. To map the interactions between the economic forces generated by the individual gravitational fields of various regions, the principle of vector superposition is applied to provide the resulting total field. Through a cross-analysis that employs gravitational fields and Moran's I, spatial concentration phenomena in the American market will be studied.
JEL classification: A12, B1, B27, C31, F10, F20, R30.
... In short, there are two contradictory theories on the relationship between income and wealth inequality and growth. The classical approach, well illustrated by Kaldor (1956), maintains that the high marginal propensity to save observed much more among the rich than among the poor indicates that initial income inequality later generates higher savings, capital accumulation and growth. Other arguments in favour of the impact of inequality as a catalyst for growth are based on the existence of the principle of indivisibility of investments and on incentive effects. ...
In contrast to former investigations in the growth-poverty literature, this research constructs a panel vector autoregressive model to explore the interactive relationship between income inequality, institutional quality, inclusive growth and poverty of 82 low and middle income developing countries from 1996 to 2022. In addition, we employed the impulse response function tool, which is the reaction of any dynamic system in response to some external change, to comprehend the reaction of poverty aftershocks on inclusive growth, income inequality and institutional quality variables. Finally, the study was completed by the variance decomposition of all variables. The empirical results indicate that inclusive growth is negatively significant determinant of poverty, while inequality and institutional quality are positive but insignificant. Meanwhile, income inequality and institutional quality have a significant effect on inclusive growth. From a general perspective, the results reveal that no causal relationship exists between inequality and institutional quality. The results of the variance decomposition confirm the above outcomes.
... The (functional) income distribution is also decisive in Kaldor's work. Kaldor points out that investment leads to savings and develops the conditions under which the savings are of the same size as the preceding savings (Kaldor 1955). Kaldor also emphasizes the role of technological change for economic growth. ...
Digitalization supposedly fosters sustainability and brings about strong economic growth. These promises foster hopes that green growth – that is, to reconcile economic growth with environmental sustainability – is possible. However, digitalization has so far neither led to strong economic growth nor to substantial improvements for environmental sustainability. This article investigates why digitalization has not so far lived up to its promises based on a pluralistic method combining insights from neoclassical and ecological economics, and from post-Keynesian and neo-Marxian perspectives. It finds that the limited effect of digitalization on economic growth is due to its negative effect on aggregate demand, primarily via increasing inequality. The inability of digitalization to substantially improve environmental sustainability can be explained by a combination of distorted relative prices of inputs, missing government investment, and the high environmental footprint of the information and communication technologies sector. It is unclear whether policies to improve the environmental effect of digitalization foster or dampen economic growth. Therefore, gearing digitalization towards supporting environmental sustainability is compatible with an a-growth, rather than a green growth, strategy.
... On the other hand, the causes and consequences of inequality have been studied by nearly all economic schools of thought, including the two this article is concerned with: post-Keynesian and ecological economics. Post-Keynesians have emphasised the role of a fair distribution of functional income (the shares of wages and profits in national income) for growth, employment and other macroeconomic variables (Hein/Vogel 2008;Kaldor 1955;Kalecki 1971;Onaran/ Obst 2016;Pasinetti 1962); more recently Ederer/Rehm (2020) have shown that interpersonal inequality of wealth (that is, the distribution of wealth at the level of deciles, percentiles or individuals) is likely to increase in Europe over forthcoming years. Ecological economists have started to address concerns regarding the risks of rising inequality in the specific context of slower growth. ...
This article establishes a theoretical link between accelerated obsolescence and interpersonal inequality of income and wealth. The author designs a simple stock–flow consistent macroeconomic model and simulates an acceleration of obsolescence in different budget and fiscal policy scenarios. His results show that, despite the increase in revenues generated by extra constrained expenditures and the associated multiplicative effects, the economic consequences of fast obsolescence remain negative. As effective disposable income declines for workers and either decreases less or increases for capitalists, income and wealth inequalities are exacerbated. Hence an acceleration of obsolescence has detrimental effects both on distributive and on environmental grounds. Conversely, in line with the degrowth paradigm, the author shows how slowing down obsolescence may be sensible both socioeconomically and environmentally. It would be beneficial to wage earners while reducing pressures on the environment; the only losers would be profit earners.
In a comprehensive study across 32 Asian countries and territories spanning 2002–2018, we unveil the surprising impact of uncertainty on income inequality. Contrary to conventional expectations, our analysis reveals a fascinating trend: heightened uncertainty appears to wield a dual impact on income distribution. While it diminishes the income shares of both the richest and the poorest segments of society, the reduction is far more pronounced among the wealthiest quintile. Surprisingly, this outcome leads to a lessening of income inequality. The results are robust with fixed effects, feasible generalized least squares, and especially panel vector autoregression (PVAR) to tackle endogeneity concerns. The findings imply that in a more stable environment, the rich enjoy a higher growth of income than the poor, while in higher uncertainty, the income of the rich drops more dramatically than that of the poor. Thus, policymakers should take this into consideration for appropriately making income redistribution policies during normal and crisis periods, especially considering the varying impact of uncertainty on different segments of society.
Korean economy is now showing a new growth pattern. Negative GDP gap
continues for years and potential GDP growth rate is decreasing at a speed
close to that of actual GDP growth rate. But these phenomena are hard to be
explained by the “conventional view” that supply factors determine long-run
economic growth. On these backgrounds, this paper surveys the theoretical
literature on the relationship between demand and economic growth, assesses
the current low growth trend of the global economy, and conducts an
econometric analysis using Korean data to see whether aggregate demand can
affect long-run economic growth. The analysis focuses on changes in the link
between aggregate demand and aggregate supply. Demand-led growth theory,
developing with effective demand theory and aggregate demand approach as its
two pillars, implies that deficiency of demand may be one of causes of recent
sluggish global economic growth. The labor income share has decreased since
the 1980s, a shortage of investment has been chronic, and inflation remains
low despite of a decline in potential GDP. Moreover, empirical analysis, which
adopts Bashar (2011, 2012)’s identification methodology, indicates that
aggregate demand shocks have a permanent impact on the long-run economic
growth of Korea. The result also shows that such relationship has been
intensified after 2012.
The golden age was a model of social market economy that focused on promoting cooperation both at international level between nation states and at national level between workers, employers, and governments. Within the EU region, the emergence of the new economic orthodoxy, as this is reflected by the prevalence of the neoliberal dogma, has spawned a new wave of criticism. The efficacy of the mechanism adopted to proceed to European Monetary Union provided the platform on which lingering doubters level their concern. In this paper a theoretical exploration of the new liberal thinking is being pursued in an attempt to unveil the rationale of the policies implied by the emerging consensus as well as provide alternative policy channels.
z Bu çalışmada, Türkiye ekonomisinin 1985-2021 dönemi için basit parasal oran ve 1990-2021 dönemi için MIMIC model yöntemleri kullanılarak kayıt dışı ekonomi tahmin edilmiştir. Basit parasal oran yöntemi tahmin sonuçlarına göre, kayıt dışı ekonominin yıllar itibariyle %1,88 ile %51,27 arasında değiştiği görülmüştür. MIMIC model yöntemi tahmin sonuçlarına göre ise kayıt dışı ekonomi %20,38 ile %38,76 arasında değişmektedir. Özellikle 1999 yılından sonra kayıt dışı ekonomi belirgin bir şekilde artmıştır. 2021 yılında ise %25,64 seviyesine düşmüştür. Daha sonra MIMIC model ve basit parasal oran yöntemleri kullanılarak tahmin edilen kayıt dışı ekonomi serilerine Harvey vd. (2008) doğrusallık testi uygulanmıştır. Hem MIMIC hem de basit parasal oran yöntemi ile tahmin edilen kayıt dışı ekonomi serisi için uygulanan Harvey vd. (2008) testi sonucu kayıt dışı ekonomi serileri doğrusal yapıda bulunmuştur. Daha sonra MIMIC model yöntemi ile tahmin edilen kayıt dışı ekonomiyi etkileyen mali, sosyal ve ekonomik değişkenler belirlenerek iki farklı ekonometrik model kurulmuştur. Modellerin katsayıları
Bu çalışma, Klasik Okul’un önde gelen isimlerinden biri olan David Ricardo’nun eserlerinde ele aldığı konuları, iktisadi adalet kavramı bağlamında inceleme amacına sahiptir. Bu amaç doğrultusunda öncelikle Ricardo’nun hayatı ve başlıca eserleri ele alınmaktadır. Sonrasında adalet ve iktisadi adalet üzerine yaptığı değerlendirmeler incelemektedir. En dikkat çeken eseri olan On the Principles of Political Economy and Taxation, bunlar üzerine çalışan çeşitli bilim insanlarının bakış açıları da dikkate alınarak iktisadi adalet perspektifiyle analiz edilmektedir. Ricardo, ekonomik politik olarak bilinen ve iktisat ile siyasetin kesişimini; piyasalar, devlet, fiyat, rant, kar, ücret gibi konular dahilinde inceleyen yöntemin en iyi uygulayıcılarından olmuştur. Sanayi devrimi İngiltere’sinin durumunu ve ekonomik yansımalarını gözler önüne seren çalışmalarıyla dikkat çekmiştir. Para, bankacılık sistemi, faiz oranı ve döviz kuru gibi konuları, klasik iktisadi düşünce mantalitesiyle analiz etmiştir. Ricardo’ya göre, sayılan bu kavramlar, iktisadi adaletin geniş kitlelere yayılmasına imkân veren ya da engelleyen araçlardır. O, toprağın fiyatının ve toprak rantının orta ve uzun vadede geçirdiği değişimin asıl sorun olduğunu ifade etmiştir ve bunun, iktisadi adaletin tesisini engelleyen olduğu yıkıcı bir etmen olduğunu söylemiştir. Serbest ticaretin faydaları üzerine geliştirdiği ‘’Karşılaştırmalı Üstünlük Teorisi’’ ile tanınırlığını artırmıştır
In this paper, we analyze the role of financialization, namely securitization and the production of structured financial products, within the functioning of a monetary capitalist economy of production. We do this by embedding such 'financial innovations' in an extended financialized monetary circuit. We complement this theoretical analysis with data about the evolution of the commercial banks in the US economy since the end of World War II. We show how the 'financial side of financialization', by allowing commercial banks to extend more credit to the economy, and household sector in particular, may have significantly contributed to the monetization of surplus value in neoliberal capitalist regimes. In this sense, we stress how financialization appears to be fully consistent rather than dysfunctional to the needs of capitalist economies. We also note that this may come at the cost of heightened systemic fragility. While financialization may enable capitalist system to monetize profits more easily, it also modifies the structure of the pyramid of money hierarchy and favor the expansion of what has been defined as 'fictitious liquidity' relative to bank money. In our view, this last contradiction, can make capitalist economies more exposed to in-depth macro-financial instability as soon as financial turmoil emerges.
This comprehensive study investigates the relationship between income inequality and economic growth. The main objectives of this research are to determine the extent to which income inequality affects economic growth, to identify potential mechanisms underlying this relationship, and to provide policy recommendations based on the findings. The study utilizes a broad range of economic indicators and employs a rigorous statistical analysis to assess these dynamics. The findings reveal a significant and negative correlation between income inequality and economic growth, highlighting the detrimental impact of high income inequality on overall economic development. The implications of these findings suggest that addressing income inequality is crucial for sustained and equitable economic growth, with policy recommendations focusing on strategies to reduce inequality and promote social cohesion.
Income inequality is a pervasive issue with far-reaching implications for economic growth and societal well-being. This comprehensive study endeavors to unravel the intricate relationship between income inequality and economic growth through a multifaceted examination of theoretical frameworks, empirical evidence, and data analysis. By synthesizing insights from a diverse array of literature and methodologies, the article offers a nuanced understanding of how income inequality influences various aspects of economic growth dynamics.
The study begins by delineating the conceptual underpinnings of income inequality, drawing on seminal works by economists such as Thomas Piketty, Simon Kuznets, and Amartya Sen. It explores the multidimensional nature of income inequality, encompassing disparities in wealth distribution, educational attainment, access to opportunities, and social mobility. Recognizing the complex interplay between economic structures, institutional frameworks, and social norms, the analysis adopts a holistic approach to elucidate the mechanisms through which income inequality impacts economic growth trajectories.
One crucial aspect examined is the effect of income inequality on investment and savings behavior. While moderate levels of inequality may incentivize savings and investment among affluent individuals, excessive inequality can hinder aggregate demand, dampen consumer spending, and impede investment in human capital and productive assets. Moreover, persistent inequality may exacerbate financial instability and hinder long-term economic resilience, as observed in the aftermath of the 2008 global financial crisis.
The study also investigates the role of income inequality in shaping human capital accumulation and labor market dynamics. High levels of inequality can undermine access to quality education and healthcare, perpetuating intergenerational cycles of disadvantage and constraining the potential for inclusive growth. Moreover, unequal access to economic opportunities and social mobility can lead to talent misallocation and inefficiencies in resource allocation, stifling innovation and productivity growth in the long run.
Furthermore, the analysis delves into the socio-political ramifications of income inequality, exploring its implications for social cohesion, political stability, and institutional efficacy. Rising inequality often breeds social discontent, exacerbates grievances, and undermines trust in public institutions, posing significant challenges to governance and social cohesion. In extreme cases, widening income disparities may fuel populist movements, polarization, and political instability, with adverse consequences for economic policymaking and investment climate.
By synthesizing insights from diverse disciplinary perspectives and empirical studies, this comprehensive analysis provides a robust foundation for understanding the multifaceted implications of income inequality on economic growth. The findings underscore the importance of adopting holistic policy approaches that address the root causes of inequality while promoting inclusive economic growth strategies. From targeted redistributive policies and progressive taxation to investments in education, healthcare, and social safety nets, there exist various avenues for mitigating inequality and fostering sustainable, equitable economic development. Ultimately, by addressing the underlying drivers of income inequality, policymakers can pave the way for a more prosperous, resilient, and inclusive society.
More than 80 percent of the population in Ethiopia lives in rural areas and their main source of income is agriculture. Agriculture accounts for 45 percent of the Gross Domestic Product (GDP) and employs 85 percent of the labour force.Export of agricultural products constitutes 86 percent of the total foreign exchange earnings. The country has taken different measures to diversify and increase the contribution of the export sector to economic growth such as; export trade duty incentive scheme, export credit guarantee scheme and foreign exchange retention scheme to those wholly engaged in supplying their products to foreign markets. Despite the incentives taken by the country, the export sector has depended on a few agricultural products mainly coffee, oil seeds and pulses which are characterized by fluctuations in quantity, price and have low competitiveness on the world market. The objective of the study was to assess the trend and impact of agricultural (coffee, oilseed and pulses) exports on economic growth of Ethiopia over the last forty years by looking at: the existence of long run relationship between agricultural export and economic growth; the speed of adjustment in the long run and the existence of causality between the agricultural export and economic growth. The analysis was done using co-integration model, Error correction model and Granger causality model. The findings of the study showed that Coffee export and oilseeds export have a positive and significant relationship with economic growth. While, pulses export was found to have negative and insignificant effect on economic growth in short run and positive but insignificant in the long run. On the other hand the causality relationship found that there is bi-directional relationship between coffee export, oilseed export and economic growth whereas unidirectional relationship was found between pulses export and economic growth. Based on the findings, it is recommended that policies aimed at increasing the productivity and quality of these cash crops should be implemented. Also additional value should be added to them before exporting. Correspondingly, there is also a need to devote resources on the production of non-export goods in order to increase exports since they have bi-directional relationship. When this is done, it will lead to a higher rate of economic growth in Ethiopia.
Mature economies may experience fluctuations, but the average medium and long run growth rate matches the natural rate. Like Kaldor's neo-Keynesian models, the Marx-Goodwin tradition explains this outcome by endogenizing the distribution of income and assuming that the accumulation of capital is increasing as a function of the profit share. The application of Goodwin cycles to developing economies may be hard to justify, however. The modified Goodwin models in this paper include relative-wage norms as a central element of wage formation. Norms change endogenously, leading to path dependence (hysteresis) in the stationary solution for the employment share of the modern sector. The effects of shocks – the sensitivity of the long-run outcome to initial conditions – may be amplified by non-linearities in the adjustment of wages to deviations of actual wages from the norm.
Ülkelerin elde ettiği gelir kadar gelirin bölüşümü de bir gelişmişlik ölçüsü olarak değerlendirilmektedir. Bu çalışmada gelir dağılımı türlerinden fonksiyonel gelir dağılımı, Türkiye ekonomisi için ele alınmıştır. Bu çalışmanın literatürden ayrılan özelliği ise yapısal kırılmaların dikkate alınarak analizlerin yapılmış olmasıdır. Çalışmanın amacı, Türkiye ekonomisinde fonksiyonel gelir dağılımı yapısının sürdürülebilir olup olmadığını ortaya koymaktır. Bu bağlamda öncelikle gelir dağılımının yapısı incelenmiş ve faktör gelirleri arasındaki eşitsizliğin kaynakları araştırılmıştır. Sürdürülebilirlik analizi için bu çalışmaya özel bir değişken türetilmiş ve ampirik analiz bu değişken üzerinden yapılmıştır. Ekonometrik yöntem olarak hem geleneksel hem de yapısal kırılmaları dikkate alan birim kök testleri kullanılmıştır. Elde edilen bulgulara göre fonksiyonel gelir dağılımı sürdürülebilir bulunmamış ve politika önerileri getirilmiştir. Ayrıca müteşebbis gelirlerinin fonksiyonel gelir dağılımına yönelik bozucu etki yaptığı saptanmıştır. Çalışmanın kısıtı, faktör gelirlerinin ayrıntılı olarak ayrıştırıldığı verilerin bulunmamasıdır. Bu nedenle TÜİK tarafından yayımlanan gelir ve yaşam koşulları araştırmasından da faydalanarak fonksiyonel gelir dağılımındaki eşitsizliklerin izleri sürülmeye çalışılmıştır.
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.
This study analyzes economic growth and income inequality in Ethiopia to test the applicability of the inverted U shaped Kuznets hypothesis and to identify the determinants of income inequality in the country. To address these objectives successfully, annually recorded time-series data from 1992 to 2021 were applied and the data were analyzed using the newly developed “non-linear” auto-regressive distributed lag (NARDL) model. In addition to this econometric model, descriptive analysis was applied to observe the nature of the data distribution using skewedness, kurtosis and other measures of variation and central tendency. The relationship between growth and inequality in the study period was depicted using graphs, although there was no specific relationship between growth and inequality, in contrast to the idea of Kuznets curve. The estimation result from the ‘non linear’ ARDL model shows variables that can affect the level of the Gini index in both the short run and long run periods. In this regard, the lagged value of the Gini coefficient and secondary school enrollments drop out and negatively affect the Gini index, while the rising and failing parts of RGDP are positively related to the level of income inequality but with an asymmetric effect.
The whole world is facing the issue of altering climate and bad environmental quality due to the extreme increase in carbon emissions. Against the backdrop, this study plans to examine the effect of environmental degradation on human development, controlling for income inequality, education inequality, gender inequality, unemployment, GDPPC, institutional quality and urbanization in the context of very high, high, medium and low HDI economies during the time scope from 1996 to 2021. For measuring environmental impact, we use both ecological footprints and carbon dioxide emission (CO2) figures for these countries. Overall, the generalized method of moments analysis confirms the strong relationship among the study variables. GMM analysis confirms that environmental quality by surging the ecological footprints and carbon emission deteriorates human development of the selected nations. Similarly, disparities in the form of income, education and gender impose an adverse impact on human development as unemployment also has a contrary impact on human development. While GDP, institutional quality and urbanization are evidenced to ensure human welfare. Hence, considering these key outcomes, a set of relevant human welfare-related policies needs to be recommended in the context of selected countries.
The present paper works out a demand-led growth model of a labour-constrained economy with an endogenous direction of technical change. It draws on the Kaleckian-Steindlian tradition to examine the short-run relation between income distribution, capacity utilization, and capital accumulation; on Goodwin-type growth cycle models to investigate the dynamic interaction between labour market and distributive conflict; on the induced innovation literature to link labour productivity growth to income distribution. The model defines a two-dimensional system of differential equations in the wage share and the employment rate at full capacity to investigate the properties of the long-run equilibrium. In a Kaleckian fashion, an endogenous rate of capacity utilization allows effective demand and income distribution to affect the long-run equilibrium. We find that: i) an exogenous increase in workers' bargaining power raises the long-run labour share, capital accumulation, labour productivity growth, and real wage growth, regardless of the short-run demand and growth regime of the economy; ii) a positive institutional shock to the labour share may cause the long-run employment rate to fall even in a wage-led demand regime; conversely, iii) positive technology shocks reduce the long-run rate of growth of the economy in a wage-led growth regime; thus, strengthening labour market regulation emerges as an unambiguously better strategy to raise the long-run labour share, capital accumulation, and labour productivity growth.
The distributive conflict is a key characteristic of capitalist economies. Although typically neglected in neoclassical literature, the role of power relations among social classes has always been at the very core of the theories falling within the classical-Keynesian paradigm. Most notably, the classical-Marxian approach to the theory of distribution-induced technical change has emphasized the role of labour-saving innovations as a crucial device in the distributive conflict to prevent workers from undermining the capitalists’ economic and social position. This thesis is a collection of three essays aimed at analyzing the interplay between labour market institutions, technical change, and income distribution in labour-constrained economies in light of the theory of induced technical change. More specifically, it deploys the theory of induced technical change to contribute to the debates on (i) the relationship between the decline in the labour share and stagnation of income and labour productivity in mature economies, (ii) the determinants of wage inequality and skill-biased technical change in a growth context, and (iii) the empirical evidence on the distributive cycle and the changing pattern of cyclicality of wages and labour productivity in the US economy. Chapter I works out a Kaleckian model of a labour-constrained economy with induced innovation. The traditional “underconsumptionist” Kaleckian argument – i.e. in demand-led economies, a decline in the labour share slows down capital accumulation via reduced consumption demand – is briefly contrasted with the more recent classical/Goodwinian narrative on secular stagnation – i.e. in labour-constrained economies, a decline in the labour share slows down long-run capital accumulation via reduced pressure to innovate. Then, three modifications are made to a standard Kaleckian model with a Bhaduri-Marglin investment function: (a) the economy is labour-constrained, (b) the employment rate hurts the investment rate of firms, and (c) labour productivity growth is endogenous to the labour share. This essay shows that, conditional on institutional shocks, the long-run rate of growth of the economy is increasing in the labour share, irrespective of the short-run demand and growth regime of the economy, consistently with a classical/Goodwinian argument. Conversely, the demand and growth regime of the economy appears to be still crucial for assessing the long-run effects of income distribution conditional on technology shocks. Chapter II extends the basic classical-Marxian framework with distribution-induced technical change to include both high-skilled- and low-skilled-labour-saving innovations. The economy is assumed to face labour supply constraints only in the high-skilled segment of the labour market. Thus, the profit share interacts with the high-skilled employment rate, whereas the low-skilled labour supply is perfectly elastic. The essay then evaluates the steady-state effects of labour market institutions in a model economy in which both high-skilled- and low-skilled-labour productivities are made endogenous to income distribution and contrasts them with both the neoclassical account of skill-biased technical change and the standard Goodwin model with induced innovation. It is argued that, in contrast to the neoclassical view, skill-biased technical change is induced by exogenous shocks to the relative bargaining positions of high-skilled and low-skilled workers. Since the induced skill bias of technical change fully passes through to real wages at the steady state, labour market institutions are the ultimate driver of wage inequality. Chapter III tests an extended version of the Goodwin model for the US economy (1948-2019) that includes aggregate demand and decomposes the labour share into real wages and labour productivity. The four-dimensional SVAR is identified by means of a non-recursive identification strategy with restrictions motivated by classical-Keynesian growth theory, as in more recent empirical works on the distributive cycle. The essay shows that: (a) the empirical evidence is consistent with distribution-induced innovation in both the post-war period (1948-1984) and the Great Moderation (1985-2019), (b) the argument of procyclical labour productivity invoked by Kaleckian authors to question the source of the Goodwin pattern is not well-founded; (c) the US economy exhibits profit-led activity at business cycle frequencies, though it appears to be driven more by technology than by distributive shocks. Moreover, it is argued that the vanishing procyclicality of US labour productivity during the Great Moderation can be explained by a lessened incentive to invest in labour-saving innovations in the expansionary phase of the business cycle. Thus, the decline in the cyclical correlation between output and productivity can be linked to the breakdown of the cyclical profit squeeze through the theory of induced innovation.
This paper is an empirical test of what is called a unified theory of inequality and growth (Galor and Zeira, 1988, 1993; Galor and Moav, 2004; Galor, 2012) – in early stages of industrialization inequality enhanced the process of development by channeling resources towards individuals whose marginal propensity to save is higher, thus enhancing physical and human capital accumulation. In later stages of development, however, equality has stimulated human capital formation and growth and unequal distribution of income became a hurdle for economic development.
A number of studies have found that human capital is higher and more evenly distributed in countries with lower income and wealth inequalities. In particular, Baten and Hippe (2018) argued that inequality in the distribution of land ownership in Europe (including Russia) in the 19th century had a negative impact on human capital formation (as measured by numeracy rate).
In contrast, we find that in the regions of Russian Empire in 1897 uneven distribution of land was associated with higher levels of human capital, whereas the distribution of the human capital across the regional population was more even. The difference in the results is caused by the different measurements of land inequality.
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