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Structural Change and the Income Distribution: a Post-Keynesian disequilibrium model

  • Fabrizio Patriarca
  • Francesco Vona

    ()

    (Department of Economics, Department of Public Economics, Sapienza University of Rome)

This paper extends the out-of-equilibrium literature to analyse a structural transition characterized by the emergence of a new sector that satisfies a want lower in the hierarchical scale. In particular, the dynamic interaction demand-supply can be a source of multiple long-run outcomes if both preferences and the technology evolve endogenously. It will be shown that a successful transition to a two-sector economy is ensured by a balanced distribution of innovative rents. Moreover, the full-employment region lies between two regions of classical and Keynesian unemployment, in contrast with the standard view of a negative relationship between real wages and employment. Finally, demand shortages, due to an unbalanced distribution, can bring about a long-run slump.

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File URL: http://dipartimento.dse.uniroma1.it/Economia/Publications/papers/patvon5.pdf
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Paper provided by Dipartimento di Economia, Sapienza University of Rome in its series Working Papers - Dipartimento di Economia with number 5.

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Length: 21 pages
Date of creation: 2009
Date of revision: 2009
Handle: RePEc:des:wpaper:5
Contact details of provider: Web page: http://dipartimento.dse.uniroma1.it/economia/

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