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Human capital accumulation, income distribution, and economic growth: a demand-led analytical framework

Author

Listed:
  • Gilberto Tadeu Lima

    (Department of Economics, University of São Paulo, Brazil)

  • Laura Carvalho

    (Department of Economics, University of São Paulo, Brazil)

  • Gustavo Pereira Serra

    (Department of Economics, The New School for Social Research, New York, NY, USA)

Abstract

This paper incorporates human capital accumulation through provision of universal public education by a balanced-budget government to a demand-driven analytical framework of functional distribution and growth of income. Human capital accumulation positively impacts on workers’ productivity in production and their bargaining power in wage negotiations. In the long-run equilibrium, a rise in the tax rate (which also denotes the share of output spent in human capital formation) lowers the pre- and after-tax wage share and physical capital utilization, and thus raises (lowers) the output growth rate when the latter is profit-led (wage-led). The impact of a higher tax rate on the employment rate (which also measures human capital utilization) in the long-run equilibrium is negative (ambiguous) when output growth is wage-led (profit-led). In any case, the supply of higher-skilled workers does not automatically create its own demand.

Suggested Citation

  • Gilberto Tadeu Lima & Laura Carvalho & Gustavo Pereira Serra, 2021. "Human capital accumulation, income distribution, and economic growth: a demand-led analytical framework," Review of Keynesian Economics, Edward Elgar Publishing, vol. 9(3), pages 319-336, July.
    • Handle: RePEc:elg:rokejn:v:9:y:2021:i:3:p319-336
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    Citations

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    Cited by:

    1. de Oliveira, Guilherme & Lima, Gilberto Tadeu, 2022. "Economic growth as a double-edged sword: The pollution-adjusted Kaldor-Verdoorn effect," Ecological Economics, Elsevier, vol. 199(C).
    2. Laura Barbosa de Carvalho & Gilberto Tadeu Lima & Gustavo Pereira Serra, 2024. "Household debt, knowledge capital accumulation, and macrodynamic performance," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 47(1), pages 84-116, January.
    3. Thomas Palley, 2022. "More on the limits of New Developmentalism," Working Papers PKWP2213, Post Keynesian Economics Society (PKES).
    4. Mark Setterfield, 2023. "Post-Keynesian growth theory and the supply side: a feminist-structuralist approach," Working Papers 2302, New School for Social Research, Department of Economics.

    More about this item

    Keywords

    human capital; income distribution; economic growth; employment rate;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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