Inequality of income and wealth in the long run: A Kaldorian perspective

Soon Ryoo

No 2015-09, UMASS Amherst Economics Working Papers from University of Massachusetts Amherst, Department of Economics

Abstract: The paper examines the determinants of income and wealth inequality in a Kaldorian model where the profit share adjusts to clear the goods market and the long-run output-capital ratio is constant. The approach is radically different from both the mainstream approach that stresses properties of production function and the Kaleckian approach that emphasizes the long-run adjustment of utilization. The Kaldorian model is used to identify several developments that may have caused increasing inequality in income and wealth since the early 1980s, including the shift of the power relation in corporate firms in favor of top managerial pay, the decline in the retention rate, increasing share buybacks, rising indebtedness of lower-income households, and the stock market boom in the 1990s. In contrast to Piketty's explanation, the decline in the natural rate of growth reduces inequality of income and wealth in this Kaldorian framework.

Keywords: income and wealth distribution; managerial pay; financialization; stock- flow consistency (search for similar items in EconPapers)
JEL-codes: E12 E21 E25 E44 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-gro, nep-hme, nep-hpe, nep-mac and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Journal Article: Inequality of Income and Wealth in the Long Run: A Kaldorian Perspective (2016)
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