EconPapers    
Economics at your fingertips  
 

The dynamics of inequalities and unequal exchange of labor in intertemporal linear economies

Giorgos Galanis, Roberto Veneziani and Naoki Yoshihara

Journal of Economic Dynamics and Control, 2019, vol. 100, issue C, 29-46

Abstract: Introducing a concept of fairness of economic allocations, namely exploitation as the unequal exchange of labor (henceforth, UE exploitation) by generalizing Roemer’s (1981, 1982a) seminal models, this paper aims to answer the following two questions in the context of an intertemporal economy with linear technology: How is income and wealth inequality related (or unrelated) to the existence and persistence of UE exploitation? What are the mechanisms driving the persistent existence of UE exploitation in growing economies? Agents are UE exploited (resp. exploiters) if the amount of labor that they contribute to the economy is bigger (resp. smaller) than the amount of labor ‘received’ by them via their income. It is proved, first, that UE exploitation is monotonically correlated to functional income inequality. Second, it is shown that, unless agents discount the future, asset inequalities are necessary, but not sufficient for the persistence of UE exploitation, and capital accumulation leading to the disappearance of UE exploitation cannot be ruled out in equilibrium. Third, it is shown that, regardless of whether agents discount the future, labor-saving technical progress may yield sustained growth with persistent UE exploitation by keeping labor abundant relative to capital, which restrains wages from rising. Unlike in models with differentiable production functions, this mechanism does not rely on changes in the marginal productivity of inputs and it is entirely driven by the interaction between innovation and labor markets.

Keywords: Dynamics; Accumulation; Exploitation; Inequalities (search for similar items in EconPapers)
JEL-codes: D51 D63 C61 E11 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0165188918304020
Full text for ScienceDirect subscribers only

Related works:
Working Paper: The dynamics of inequalities and unequal exchange of labor in intertemporal linear economies (2018) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:100:y:2019:i:c:p:29-46

Access Statistics for this article

Journal of Economic Dynamics and Control is currently edited by J. Bullard, C. Chiarella, H. Dawid, C. H. Hommes, P. Klein and C. Otrok

More articles in Journal of Economic Dynamics and Control from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2019-06-29
Handle: RePEc:eee:dyncon:v:100:y:2019:i:c:p:29-46