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Social conflict, growth and factor shares

  • Tsoukis, Christopher
  • Tournemaine, Frederic

Standard growth theory is based on atomistic agents with no strategic interactions among them. In contrast, we model growth as resulting from a one-off, strategic game between workers and owners of capital (capitalists) on factor shares, in an otherwise standard AK growth model. The resulting distribution of income between factors further determines the marginal revenue product of capital and the rate of growth. We analyse the properties of four equilibria: competitive, Stackelberg equilibrium, a hybrid non-cooperative regime, and cooperative (Nash) solution. We show that our model provides a potentially richer view of the growth process than comparable models, and endogenises a key aspect of the social contract.

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File URL: http://mpra.ub.uni-muenchen.de/23365/3/MPRA_paper_23365.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 23365.

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Date of creation: 18 Jun 2010
Date of revision: 20 Jun 2010
Handle: RePEc:pra:mprapa:23365
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  1. Giuseppe Bertola, 1991. "Factor Shares and Savings in Endogenous Growth," NBER Working Papers 3851, National Bureau of Economic Research, Inc.
  2. Manning, Alan, 1995. "Developments in Labour Market Theory and Their Implications for Macroeconomic Policy," Scottish Journal of Political Economy, Scottish Economic Society, vol. 42(3), pages 250-66, August.
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  14. Frédéric Tournemaine & Christopher Tsoukis, 2009. "Status jobs, human capital, and growth: the effects of heterogeneity," Oxford Economic Papers, Oxford University Press, vol. 61(3), pages 467-493, July.
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  25. Robert S. Chirinko & Steven M. Fazzari & Andrew P. Meyer, 2004. "That Elusive Elasticity: A Long-Panel Approach to Estimating the Capital-Labor Substitution Elasticity," CESifo Working Paper Series 1240, CESifo Group Munich.
  26. Benhabib, Jess & Rustichini, Aldo, 1996. " Social Conflict and Growth," Journal of Economic Growth, Springer, vol. 1(1), pages 125-42, March.
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  29. Rodrik, Dani & van Ypersele, Tanguy, 2001. "Captial mobility, distributive conflict and international tax coordination," Journal of International Economics, Elsevier, vol. 54(1), pages 57-73, June.
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