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Wage-led growth: An introduction




The past decades have witnessed falling wage shares and a polarization of personal income distribution. Average wages and average labour compensation have not kept up with productivity growth. Functional income distribution has shifted at the expense of labour. In many countries personal income distribution has also become more unequal. By many measures income inequality is worse than at any time in the 20th century. At the same time economic growth processes have become imbalanced. Financial crises have become more frequent; household debts have risen sharply; international imbalances have increased, with some countries relying excessively on export growth. This paper argues that the polarization of income distribution and the decline in the wage share play an important role in the generation of imbalanced and unequal growth, and that a pro-labour wage policy will form an important part of a policy package that generates a stable growth regime. A wage-led growth strategy is thus advocated.

Suggested Citation

  • Stockhammer, Engelbert, 2011. "Wage-led growth: An introduction," Economics Discussion Papers 2011-1, School of Economics, Kingston University London.
  • Handle: RePEc:ris:kngedp:2011_001

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    References listed on IDEAS

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    Cited by:

    1. repec:voj:journl:v:63:y:2016:i:1:p:113-133 is not listed on IDEAS
    2. Jakob Kapeller & Bernhard Schütz, 2015. "Conspicuous Consumption, Inequality and Debt: The Nature of Consumption-driven Profit-led Regimes," Metroeconomica, Wiley Blackwell, vol. 66(1), pages 51-70, February.
    3. Thomas I. Palley, 2013. "Enriching the Neo-Kaleckian Growth Model: Nonlinearities, Political Economy, and Financial Factors," Working Papers wp335, Political Economy Research Institute, University of Massachusetts at Amherst.
    4. Palley, Thomas., 2015. "Escaping stagnation and restoring shared prosperity : a macroeconomic policy framework for job-rich growth," ILO Working Papers 994874713402676, International Labour Organization.
    5. repec:ilo:ilowps:487471 is not listed on IDEAS
    6. Thomas I. Palley, 2014. "Rethinking wage vs. profit-led growth theory with implications for policy analysis," IMK Working Paper 141-2014, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    7. Thomas I. Palley, 2015. "Inequality, the Financial Crisis and Stagnation: Competing Stories and Why They Matter," IMK Working Paper 151-2015, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    8. Kemp-Benedict, Eric, 2014. "Shifting to a Green Economy: Lock-in, Path Dependence, and Policy Options," MPRA Paper 60175, University Library of Munich, Germany.

    More about this item


    Wage-led growth; income distribution; Keynesian economics; economic policy;

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination


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