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Labour market institutions, distribution conflict and productivity growth

Author

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  • Philip Blees
  • Eckhard Hein

Abstract

Since the 1980s falling labour productivity growth and stagnation tendencies, have been accompanied by labour market deregulation, with different degrees in different countries. In this contribution, we review these two trends in the G7 economies for the period 1981 – 2019 and link them within a post-Kaleckian endogenous growth model augmented by Kaldorian, Marxian and Schumpeterian features. Within this model, we differentiate between the direct effects of labour market institutions on productivity growth and the indirect effects conveyed through distributional conflict. Labour market regulation can affect productivity growth rates through each of these channels. Differences in the development of productivity growth in the G7 are traced back to the dominance of certain channels and their direction in the respective economies, in our terminology different socio-institutional productivity regimes. This sheds light on the institutional background of technical change, while underpinning the relevance of demand-led growth and distribution conflict for productivity growth.

Suggested Citation

  • Philip Blees & Eckhard Hein, 2026. "Labour market institutions, distribution conflict and productivity growth," Working Papers PKWP2624, Post Keynesian Economics Society (PKES).
    • Handle: RePEc:pke:wpaper:pkwp2624
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    Keywords

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    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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