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Inequality, Consumption Emulation, and Growth

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  • Carlo D’Ippoliti
  • Francesco Linguanti

Abstract

We develop a short-run neo-Kaleckian model to investigate the interplay of the functional and personal distribution of income and their impact on growth. Personal distribution becomes relevant in light of the institutionalist hypothesis of consumption emulation, which makes aggregate saving dependent on the concentration of wages and profits. A more equal distribution of wages and/or profits increases aggregate demand and the rate of capacity utilization. But the wage- or profit-led demand regime crucially depends on the difference between the propensity to save out of profits and that out of wages, as well as on the impact of changes in the profit and wage shares on the concentration of personal incomes. Preliminary evidence on Italy over the period 1980s–2010s highlights that demand regimes might be a relatively short-term and cyclical characteristic of that economy, with changes in the demand regime partly explained by changes in personal income distribution. JEL Classification: E11, D31, B52

Suggested Citation

  • Carlo D’Ippoliti & Francesco Linguanti, 2023. "Inequality, Consumption Emulation, and Growth," Review of Radical Political Economics, Union for Radical Political Economics, vol. 55(4), pages 577-590, December.
    • Handle: RePEc:sae:reorpe:v:55:y:2023:i:4:p:577-590
    DOI: 10.1177/04866134231184646
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    References listed on IDEAS

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    More about this item

    Keywords

    demand regimes; income inequality; consumption emulation;
    All these keywords.

    JEL classification:

    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;

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