Inequality, financialization, and economic decline

Pasquale Tridico and Riccardo Pariboni

Journal of Post Keynesian Economics, 2018, vol. 41, issue 2, 236-259

Abstract: The objective of this article is to argue that the labor productivity slowdown experienced in recent years by several advanced countries can be explained, following a Kaldorian-Classical approach, by a weak gross domestic product (GDP) performance and by a decline in the wage share. Moreover, drawing inspiration from recent post Keynesian literature, the authors identify the ongoing worsening in income equality and the increase in the degree of financialization as other major explanatory factors of sluggish productivity. The article will provide a brief literature review concerning nonmainstream attempts to endogenize labor productivity, beginning from the famous Verdoorn-Kaldor law (Verdoorn, 1949) and the Kaldor technical progress function (Kaldor, 1961) and including Sylos Labini’s productivity equation (Sylos Labini, 1984, 1999). The authors will then discuss how labor flexibility and shareholder value orientation, one of the main aspects of financialization, can negatively affect equality and labor productivity. Finally, they propose an extended version of the Sylos Labini’s equation, where productivity growth is claimed to depend positively on GDP rate of growth and the wage share, and negatively on income inequality and financialization. They submit to empirical scrutiny their extended productivity equation; the results of their estimations provide support to their theoretical argument.

Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (33)

Downloads: (external link)
http://hdl.handle.net/10.1080/01603477.2017.1338966 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Inequality, financialisation and economic decline (2016)
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:mes:postke:v:41:y:2018:i:2:p:236-259

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/MPKE20

DOI: 10.1080/01603477.2017.1338966

Access Statistics for this article

More articles in Journal of Post Keynesian Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().