Structural Change and the Wage Share: a Two-Sector Kaleckian Model

Elton Beqiraj, Lucrezia Fanti and Luca Zamparelli

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper, we look at structural change, and in particular at the shrinking size of manufacturing in favor of the service sector, as one additional source of decline in the wage share. To the purpose, we build on Dutt (1988) to develop a two-sector Kaleckian model of growth and distribution, where the economy consists of the service and manufacturing sectors. The service good is only used for consumption while the manufacturing good is used both for consumption and accumulation of the capital stock. We assume that structural change is exogenous as it arises from a shift in consumers' preferences. We show that, when mark-ups are relatively higher in the service sector, a shift in the sectoral composition of demand in favor of the service sector good generates a rise in the pro

Keywords: structural change; functional income distribution; manufacturing; service (search for similar items in EconPapers)
JEL-codes: D33 E11 O14 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-hme, nep-mac and nep-pke
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Citations: View citations in EconPapers (1)

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