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Income Distribution and Growth: A Global Model

Author

Listed:
  • Özlem Onaran

    (Department of International Business and Economics, University of Greenwich, Greenwich SE10 9LS, London, England)

  • Giorgos Galanis

    (Department of Economics, University of Warwick, Coventry CV4 7AL, England)

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.

Suggested Citation

  • Özlem Onaran & Giorgos Galanis, 2014. "Income Distribution and Growth: A Global Model," Environment and Planning A, , vol. 46(10), pages 2489-2513, October.
    • Handle: RePEc:sae:envira:v:46:y:2014:i:10:p:2489-2513
    DOI: 10.1068/a46265
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    wage share; growth; global multiplier; consumption; investment; exports; imports; G20; developed and developing countries;
    All these keywords.

    JEL classification:

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

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