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Varieties of capitalism and growth regimes: the role of income distribution

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  • Jan Behringer
  • Till van Treeck

Abstract

This article brings together the varieties of capitalism and the growth model approaches to comparative political economy to analyse the macroeconomic implications of changes in income distribution. In the decades before the financial crisis, coordinated market economies (CMEs) and liberal market economies (LMEs) developed different but unsustainable growth models which resulted in global current account imbalances. We analyse the relative importance of wage coordination and income distribution in explaining the emergence of global imbalances. We argue that strongly rising top income shares contributed to the decline in household saving and current account imbalances in major LMEs, whereas pronounced falls in the wage share contributed to the weakness of domestic demand and rising current account balances in CMEs. Wage coordination affected current account imbalances both directly and, more importantly, indirectly through its effects on income distribution. We test the argument for a sample of 18 industrialized countries over the period 1981-2007.

Suggested Citation

  • Jan Behringer & Till van Treeck, 2018. "Varieties of capitalism and growth regimes: the role of income distribution," IMK Working Paper 194-2018, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  • Handle: RePEc:imk:wpaper:194-2018
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    5. van Treeck, Till. & Sturn, Simon., 2012. "Income inequality as a cause of the Great Recession? : A survey of current debates," ILO Working Papers 994709343402676, International Labour Organization.
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    Cited by:

    1. Eckhard Hein & Walter Paternesi Meloni & Pasquale Tridico, 2019. "Welfare models and demand-led growth regimes before and after the financial and economic crisis," FMM Working Paper 41-2019, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    2. Jan Behringer & Till van Treeck, 2018. "Revisiting debt-led and export-led growth models: a sectoral balances approach," IMK Working Paper 195-2018, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    3. Till van Treeck & Judith Niehues & Galina Kolev & Piotr Pysz & Peter Hampe & Andreas Peichl & Marc Stöckli & Georg Cremer, 2018. "Wie gerecht ist die Welt? – Soziale Ungleichheit und Wirtschaftswachstum," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 71(15), pages 03-25, August.

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    Keywords

    Functional income distribution; personal income distribution; wage coordination; varieties of capitalism; growth models;

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