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Income Shares and Capital Formation: Patterns of Recent Developments

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  • Eckhard Hein
  • Hagen Kramer

Abstract

The development of the functional income distribution in the advanced capitalist economies of France, Germany, the United Kingdom and the U.S.A. has shown a marked shift towards the profit share during the 1980s. Starting from this observation the impact of changing income shares on capital formation is studied in a post-Keynesian framework. Following a model proposed by Bhaduri/Marglin, different patterns of income distribution and capital accumulation are distinguished theoretically and are examined empirically for the manufacturing sectors of the investigated economies. It is concluded that the development of the profit share and the rate of capital accumulation on average over the business cycle implies that the conditions for the co-operative “wage-led growth” have been established again during the cycle covering the 1980s, although these opportunities for co-operation have not been realized by the supply-side politics.

Suggested Citation

  • Eckhard Hein & Hagen Kramer, 1998. "Income Shares and Capital Formation: Patterns of Recent Developments," Journal of Income Distribution, Ad libros publications inc., vol. 7(1), pages 1-1, June.
    • Handle: RePEc:jid:journl:y:1998:v:07:i:1:p:1-1
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    File URL: http://jid.journals.yorku.ca/index.php/jid/article/view/651
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    Cited by:

    1. Hein, Eckhard, 2001. "Institutions and macroeconomic performance: Central bank independence, labour market institutions and the perspectives for inflation and employment in the European Monetary Union," WSI Working Papers 95, The Institute of Economic and Social Research (WSI), Hans Böckler Foundation.
    2. Hagen Kraemer, 2011. "Die Entwicklung der funktionalen Einkommensverteilung und ihrer Einflussfaktoren in ausgewählten Industrieländern 1960-2010," IMK Studies 1-2011, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    3. Eckhard Hein, 2002. "Monetary policy and wage bargaining in the EMU: restrictive ECB policies, high unemployment, nominal wage restraint and inflation above the target," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 55(222), pages 299-337.
    4. Engelbert Stockhammer & Stefan Ederer, 2008. "Demand effects of the falling wage share in Austria," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 35(5), pages 481-502, December.
    5. Kemp-Benedict, Eric, 2014. "Shifting to a Green Economy: Lock-in, Path Dependence, and Policy Options," MPRA Paper 60175, University Library of Munich, Germany.

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