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A Kaldor Matching Model of Real Wage Declines

  • Michael Sattinger

A model linking macroeconomic phenomena and income distribution in balanced growth equilibria is developed as a variant to the Kaldor model of factor shares. It departs from the original Kaldor model in assuming equal savings rates and production determined by a matching process between workers and jobs. Macroeconomic equilibrium (national savings equal to investment) determines the ratio of jobs to employment and the ratio of unemployed to vacancies. Competitive microeconomic behavior then determines the wage and interest rates. Changes in the ratio of national debt to employment have real effects on factor prices. Implications for effects of taxes and unemployment benefits are derived. The model explains recent declines in real wages relative to productivity.

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Paper provided by University at Albany, SUNY, Department of Economics in its series Discussion Papers with number 01-10.

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Date of creation: 2001
Date of revision:
Handle: RePEc:nya:albaec:01-10
Contact details of provider: Postal: Department of Economics, BA 110 University at Albany State University of New York Albany, NY 12222 U.S.A.
Phone: (518) 442-4735
Fax: (518) 442-4736

Order Information: Postal: Department of Economics, BA 110 University at Albany State University of New York Albany, NY 12222 U.S.A.
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  1. Alan Krueger, 1999. "Measuring Labor's Share," Working Papers 792, Princeton University, Department of Economics, Industrial Relations Section..
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  8. Michael Sattinger, 1993. "General Equilibrium Effects of Unemployment Compensation with Labor Force Participation," Discussion Papers 93-03, University at Albany, SUNY, Department of Economics.
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  13. Andres Erosa & Martin Gervais, 2000. "Optimal taxation in life-cycle economies," Working Paper 00-02, Federal Reserve Bank of Richmond.
  14. Tobin, James, 1989. "Growth and Distribution: A Neoclassical Kaldor-Robinson Exercise," Cambridge Journal of Economics, Oxford University Press, vol. 13(1), pages 37-45, March.
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