Labour market institutions, distribution conflict and productivity growth

Philip Blees and Eckhard Hein

No PKWP2624, Working Papers from Post Keynesian Economics Society (PKES)

Abstract: Since the 1980s falling labour productivity growth and stagnation tendencies, have been accompanied by labour market deregulation, with different degrees in different countries. In this contribution, we review these two trends in the G7 economies for the period 1981 – 2019 and link them within a post-Kaleckian endogenous growth model augmented by Kaldorian, Marxian and Schumpeterian features. Within this model, we differentiate between the direct effects of labour market institutions on productivity growth and the indirect effects conveyed through distributional conflict. Labour market regulation can affect productivity growth rates through each of these channels. Differences in the development of productivity growth in the G7 are traced back to the dominance of certain channels and their direction in the respective economies, in our terminology different socio-institutional productivity regimes. This sheds light on the institutional background of technical change, while underpinning the relevance of demand-led growth and distribution conflict for productivity growth.

Keywords: Labour market institutions; endogenous technical change; post-Kaleckian model; Schumpeter; G7 economies (search for similar items in EconPapers)
JEL-codes: E02 E12 O47 (search for similar items in EconPapers)
Pages: 42
Date: 2026-11
New Economics Papers: this item is included in nep-pke
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