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Endogenous income distribution in the Bhaduri-Marglin model

Author

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  • Bernhard Schütz

    (University of Linz, Austria)

Abstract

The results of the Bhaduri-Marglin model build on the assumption of an exogenous profit share. The present paper examines critically the robustness of these results by asking how its results change if we take the endogeneity of the profit share into account. In doing so, the constituents of the latter (labor productivity and the real wage rate) are treated as endogenous. The paper finds that the conditions for wage- and profit-led regimes only change when we assume increases in the real wage rate to be followed by very strong labor rationalization. Furthermore, the paper shows how these additional channels can increase or decrease the profit-led/wage-led character of a regime and how they may even become a source of instability.

Suggested Citation

  • Bernhard Schütz, 2012. "Endogenous income distribution in the Bhaduri-Marglin model," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 9(2), pages 309-320.
    • Handle: RePEc:elg:ejeepi:v:9:y:2012:i:2:p309-320
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    Citations

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    Cited by:

    1. Jakob Kapeller & Bernhard Schütz, 2015. "Conspicuous Consumption, Inequality and Debt: The Nature of Consumption-driven Profit-led Regimes," Metroeconomica, Wiley Blackwell, vol. 66(1), pages 51-70, February.
    2. Jochen Hartwig, 2013. "Ist Lohnzurückhaltung gut oder schlecht für das Schweizer Wirtschaftswachstum?," KOF Analysen, KOF Swiss Economic Institute, ETH Zurich, vol. 7(2), pages 33-45, June.
    3. Jochen Hartwig, 2014. "Testing the Bhaduri-Marglin model with OECD panel data," International Review of Applied Economics, Taylor & Francis Journals, vol. 28(4), pages 419-435, July.

    More about this item

    Keywords

    Income distribution; wage-led/profit-led demand regimes; labor ra-tionalization;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution

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