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Reassessing wage-led growth in Europe: Some sceptical notes

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  • Heise, Arne

Abstract

This comment critically examines the recent claim by Alcobia and Barradas that the European Union follows a wage-led growth regime, warranting pro-labour policy intervention. While their findings support a clear policy stance, closer inspection reveals significant methodological and empirical shortcomings, including data limitations, panel heterogeneity, and questionable assumptions about causality. The paper challenges the robustness of their conclusions and questions whether functional income distribution can be effectively influenced by policy. It argues for greater theoretical caution and contextual sensitivity in policy recommendations, particularly given the unresolved ambiguities surrounding the wage- led/profit-led growth framework in diverse European economies.

Suggested Citation

  • Heise, Arne, 2025. "Reassessing wage-led growth in Europe: Some sceptical notes," ZÖSS-Discussion Papers 121, University of Hamburg, Centre for Economic and Sociological Studies (CESS/ZÖSS).
    • Handle: RePEc:zbw:cessdp:325826
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    References listed on IDEAS

    as
    1. Cecilia Garcia-Penalosa & Eve Caroli & Philippe Aghion, 1999. "Inequality and Economic Growth: The Perspective of the New Growth Theories," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1615-1660, December.
    2. repec:dau:papers:123456789/10091 is not listed on IDEAS
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    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • 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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