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A Kaldor Matching Model of Real Wage Declines

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  • Michael Sattinger

Abstract

A model linking macroeconomic equilibrium 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 saving rates and production determined by a matching process between workers and jobs. Macroeconomic equilibrium (national savings equal to investment) combines with competitive microeconomic behavior to determine the real wage and real interest rate. An increase in the ratio of national debt to employment reduces the real wage, explaining recent declines.

Suggested Citation

  • Michael Sattinger, 2003. "A Kaldor Matching Model of Real Wage Declines," Discussion Papers 03-04, University at Albany, SUNY, Department of Economics.
    • Handle: RePEc:nya:albaec:03-04
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    File URL: http://www.albany.edu/~ms339/kaldor.pdf
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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