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Disarticulation as a Constraint to Wage-led Growth in Dual Economies

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  • Adam Aboobaker

    (Department of Economics, University of Massachusetts Amherst)

Abstract

Much of the recent interest in the relationship between growth and distribution has focused on advanced economies and neglected issues of development and structural transformation. The purpose of this paper is to make a contribution to this gap by arguing that, even in the short-run, some of the conclusions from neo-Kaleckian models may not be robust to developing country contexts with extreme income inequality and correspondingly polarized patterns of consumption. This argument is supported by a review of, amongst other, Kalecki's writing on development and a two-sector model building on Razmi et al (2012). The paper can be interpreted as a call for greater consideration of structural heterogeneity in extending the analysis of advanced economies to developing economies and as a caution against calls for general aggregate demand policy, in this case shifts in income distribution, to address structural transformation problems.

Suggested Citation

  • Adam Aboobaker, 2019. "Disarticulation as a Constraint to Wage-led Growth in Dual Economies," UMASS Amherst Economics Working Papers 2019-11, University of Massachusetts Amherst, Department of Economics.
    • Handle: RePEc:ums:papers:2019-11
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    File URL: http://www.umass.edu/economics/publications/2019-11.pdf
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    References listed on IDEAS

    as
    1. Razmi, Arslan & Rapetti, Martin & Skott, Peter, 2012. "The real exchange rate and economic development," Structural Change and Economic Dynamics, Elsevier, vol. 23(2), pages 151-169.
    2. Peter Skott, 2017. "Weaknesses of 'wage-led growth'," Review of Keynesian Economics, Edward Elgar Publishing, vol. 5(3), pages 336-359, July.
    3. Jayati Ghosh, 2016. "Michal Kalecki," Chapters, in: Erik S. Reinert & Jayati Ghosh & Rainer Kattel (ed.), Handbook of Alternative Theories of Economic Development, chapter 25, pages 475-484, Edward Elgar Publishing.
    4. Bhaduri, Amit & Marglin, Stephen, 1990. "Unemployment and the Real Wage: The Economic Basis for Contesting Political Ideologies," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 14(4), pages 375-393, December.
    5. FitzGerald, E V K, 1990. "Kalecki on Financing Development: An Approach to the Macroeconomics of the Semi-industrialised Economy," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 14(2), pages 183-203, June.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Wolf, Christina, 2023. "Demand-growth in support of structural change: Evidence from Nigeria's formal manufacturing sector," Structural Change and Economic Dynamics, Elsevier, vol. 67(C), pages 347-358.

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    More about this item

    Keywords

    Growth and distribution; Kaleckian models; Development; Structural change; Kalecki;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
    • B3 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals

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