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A Kaldor Matching Model of Real Wage Declines

  • Michael Sattinger

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.

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File URL: http://www.albany.edu/economics/research/workingp/2003/kaldor.pdf
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Paper provided by University at Albany, SUNY, Department of Economics in its series Discussion Papers with number 03-04.

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Date of creation: 2003
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Handle: RePEc:nya:albaec:03-04
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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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  17. Arthur J. Hosios, 1990. "On The Efficiency of Matching and Related Models of Search and Unemployment," Review of Economic Studies, Oxford University Press, vol. 57(2), pages 279-298.
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