The real roots of the great recession: unsustainable income distribution

Massimo Florio

Departmental Working Papers from Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano

Abstract: This article suggests that, at the root of the Great Recession, there are two imbalances: an unsustainable distribution of income in advanced economies, and a growing income gap between them and the rest of the world. Several factors have squeezed the share of labour income, particularly of less skilled workers in advanced capitalist economies and hugely increased the share of capital income (sometimes disguised as pay for the work of top managers). In the US and elsewhere, the demand for consumer goods did not fall until the recent Great Recession thanks to the growth of private debt. A progressive income redistribution policy is seen as the core structural reform needed to rebalance the system, along with a change in international economic relations.

Keywords: Great Recession; income distribution; shares of labour and capital income (search for similar items in EconPapers)
Date: 2012-02-01
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Persistent link: https://EconPapers.repec.org/RePEc:mil:wpdepa:2012-01

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