Distributive Conflict and Wage Formation in Germany: A Kaleckian Perspective on Nominal Wages and Demand (1990–2024)

Houssam Boughabi

MPRA Paper from University Library of Munich, Germany

Abstract: This paper investigates the interplay between distributive conflict, wage dynamics, and persistent unemployment within a Kaleckian framework, emphasizing the long-memory properties of wages. We develop a stochastic model in which wages adjust adaptively to cumulative historical discrepancies between prices and wages, reflecting backward-looking expectations, institutional rigidities, and distributive conflict. Applying this framework to Germany over the period 1990–2024, we provide empirical evidence that persistent price–wage divergences generate long-lasting effects on real wages and aggregate demand. Within a Kaleckian perspective in which investment and employment are demand-driven, these wage dynamics contribute to the persistence of unemployment by weakening consumption and effective demand over time. Our findings highlight that long-memory wage adjustment amplifies the macroeconomic consequences of distributive conflict and inflation, underscoring the importance of historical wage inertia in shaping employment outcomes. The results offer new insights into the structural origins of persistent unemployment in advanced economies.

Keywords: Kaleckian economics; wage–price dynamics; long-memory; distributive conflict; persistent unemployment (search for similar items in EconPapers)
JEL-codes: C22 E12 E24 E32 J30 (search for similar items in EconPapers)
Date: 2026-01-17
New Economics Papers: this item is included in nep-hme and nep-pke
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