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Income distribution and growth: a global model

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  • Ãzlem Onaran
  • Giorgos Galanis

Abstract

This paper estimates the effects of a change in the wage share on growth at global level in the G20 countries. A decrease in the wage share in isolation leads to lower growth in the euro area, Germany, France, Italy, the UK, the US, Japan, Turkey, and South Korea, whereas it stimulates growth in Canada, Australia, Argentina, Mexico, China, India, and South Africa. However, a simultaneous decline in the wage share in all these countries leads to a decline in global growth. Furthermore, Canada, Argentina, Mexico, and India also experience negative effects on growth when they decrease their wage share along with their trading partners. The results indicate that the global decline in labour share has had significant negative effects on growth. Keywords: wage share, growth, global multiplier, consumption, investment, exports, imports, G20, developed and developing countries

Suggested Citation

  • Ãzlem Onaran & Giorgos Galanis, 2014. "Income distribution and growth: a global model," Environment and Planning A, Pion Ltd, London, vol. 46(10), pages 2489-2513, October.
  • Handle: RePEc:pio:envira:v:46:y:2014:i:10:p:2489-2513
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    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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