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The Dynamics of Exploitation and Inequality in Economies with Heterogeneous Agents

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  • Galanis, Giorgos
  • Veneziani, Roberto
  • Yoshihara, Naoki

Abstract

This paper analyses the relation between growth, inequalities, and exploitation as the unequal exchange of labour (UE exploitation). An economy with heterogeneous, intertemporally optimising agents is considered which generalises John Roemer's [52, 53] seminal models. First, a correspondence between prots and the existence (and intensity) of UE exploitation is proved in the dynamic context. This result is important, positively, because the prot rate is one of the key determinants of investment decisions, and, normatively, because it provides a link between UE exploitation and the functional distribution of income. Second, it is shown that asset inequalities are fundamental for the emergence of UE exploitation, but they are not sucient for its persistence, both in equilibria with accumulation and growth, and, perhaps more surprisingly, in stationary intertemporal equilibrium paths. Labour-saving technical progress, however, may yield sustained growth with persistent UE exploitation by keeping labour abundant relative to capital. Persistent inequalities in income and labour exchanged arise from the interaction between labour market conditions and dierential ownership of productive assets.

Suggested Citation

  • Galanis, Giorgos & Veneziani, Roberto & Yoshihara, Naoki, 2018. "The Dynamics of Exploitation and Inequality in Economies with Heterogeneous Agents," Discussion Paper Series 679, Institute of Economic Research, Hitotsubashi University.
  • Handle: RePEc:hit:hituec:679
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    More about this item

    Keywords

    Dynamics; accumulation; exploitation; inequalities;
    All these keywords.

    JEL classification:

    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian

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