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Do Profits Affect Investment and Employment? An Empirical Test Based on the Bhaduri-Marglin Model

In: Wages, Employment, Distribution and Growth

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  • Özlem Onaran
  • Engelbert Stockhammer

Abstract

This chapter aims at clarifying the macroeconomic effect of changes in functional income distribution empirically for a range of developed and developing countries. In doing so, our goal is to discuss the crucial policy issues related with neoliberal policies in the developing, as well as developed countries in the post-1980 era; by focusing on the effects of distributional policies we seek to contribute to the explanation of the reasons for the stagnant accumulation and employment growth rates. Both the structural adjustment agenda in the developing countries, and the debate about the European unemployment have been cases where mainstream economics has pushed for policy changes favouring a pro-capital redistribution of income, and a deregulation of the labour market. For neoclassical economics unemployment is, in the last instance, a labour market phenomenon. It is due to ‘too high’ real wages, which in turn are a result of so-called labour market ‘distortions’, like labour market regulations and trade unions. In contrast, Post-Keynesians argue that unemployment is the result of demand deficiencies on the goods markets, and that the latter result particularly from a slowdown in investments.

Suggested Citation

  • Özlem Onaran & Engelbert Stockhammer, 2006. "Do Profits Affect Investment and Employment? An Empirical Test Based on the Bhaduri-Marglin Model," Palgrave Macmillan Books, in: Eckhard Hein & Arne Heise & Achim Truger (ed.), Wages, Employment, Distribution and Growth, chapter 9, pages 206-222, Palgrave Macmillan.
  • Handle: RePEc:pal:palchp:978-0-230-37178-1_10
    DOI: 10.1057/9780230371781_10
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    References listed on IDEAS

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    1. Stockhammer, Engelbert & Onaran, Ozlem, 2004. "Accumulation, distribution and employment: a structural VAR approach to a Kaleckian macro model," Structural Change and Economic Dynamics, Elsevier, vol. 15(4), pages 421-447, December.
    2. Engelbert Stockhammer, 2000. "Explaining European Unemployment: Testing the NAIRU Theory and a Keynesian Approach," Department of Economics Working Papers wuwp068, Vienna University of Economics and Business, Department of Economics.
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    Citations

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    Cited by:

    1. Olivier Allain, 2006. "La modération salariale : le point de vue des (néo-)kaleckiens," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00196500, HAL.
    2. Olivier Allain, 2011. "The impact of income distribution on consumption: a reassessment," Post-Print hal-00712657, HAL.
    3. Eckhard Hein & Lena Vogel, 2007. "Distribution and growth reconsidered - empirical results for Austria, France, Germany, the Netherlands, the UK and the USA," IMK Working Paper 03-2007, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    4. Sara Amoroso & Pietro Moncada-Paternò-Castello, 2018. "Inward Greenfield FDI and Patterns of Job Polarization," Sustainability, MDPI, vol. 10(4), pages 1-20, April.
    5. Julio López & Ignacio Perrotini, 2006. "Tassi di cambio fluttuanti, deprezzamento valutario e domanda effettiva," Moneta e Credito, Economia civile, vol. 59(235), pages 233-256.
    6. Heather Boushey & Christian E. Weller, 2006. "Inequality and Household Economic Hardship in the United States of America," Working Papers 18, United Nations, Department of Economics and Social Affairs.
    7. Julio Lopez & Ignocio Perrotini Perrotini, 2006. "On floating exchange rates, currency depreciation and effective demand," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 59(238), pages 221-242.
    8. Chaiechi, Taha, 2012. "Financial development shocks and contemporaneous feedback effect on key macroeconomic indicators: A post Keynesian time series analysis," Economic Modelling, Elsevier, vol. 29(2), pages 487-501.
    9. Olivier Allain, 2006. "La modération salariale : le point de vue des (néo-)kaleckiens," Post-Print halshs-00196500, HAL.
    10. Julio Lopez & Ignocio Perrotini Perrotini, 2006. "On floating exchange rates, currency depreciation and effective demand," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 59(238), pages 221-242.

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    More about this item

    Keywords

    Labour Market; Real Wage; Capacity Utilization; Good Market; Macroeconomic Policy;
    All these keywords.

    JEL classification:

    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles

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