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The equalizing spiral in early 21st century Brazil: a Kaleckian model with sectoral heterogeneity

Clara Brenck (zanoc11@newschool.edu) and Laura Barbosa de Carvalho

No 2019_30, Working Papers, Department of Economics from University of São Paulo (FEA-USP)

Abstract: The relative success of the Brazilian and other South American economies in combining higher growth rates with a reduction of income inequality in the 2000s can be better understood through the study of the relationship between wage distribution, consumption patterns and the composition of employment. By starting from the Neo-Kaleckian framework, this paper builds a two-sector open economy model with two types of workers. An unstable cumulative causation mechanism through which a reduction in wage inequality increases consumption of non-tradable goods, leading to higher demand for low-skilled labor and a further reduction in inequality may arise.

Keywords: growth; distribution; wage inequality; employment composition; Kaleckian model (search for similar items in EconPapers)
JEL-codes: C62 E12 E25 O38 O54 (search for similar items in EconPapers)
Date: 2019-08-19
New Economics Papers: this item is included in nep-mac and nep-pke
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Journal Article: The equalizing spiral in early 21st century Brazil: a Kaleckian model with sectoral heterogeneity (2020) Downloads
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