Slow inflation = wage repression: fiscal expansion won’t change the equation

Lance Taylor

Chapter 4 in Economic Development, Economic Growth and Income Distribution, 2025, pp 74-84 from Edward Elgar Publishing

Abstract: Data on inflation, wage change, and the wage and profit shares in income are examined to explain low inflation and rising profit share in the United States. The analysis adopts a structuralist perspective, using a systemic approach that takes into account price–cost and price–aggregate demand relations, and a theory of inflation involving the conflicting claims of workers and capitalist businesses, and applies the structuralist approach to a high-income country. The chapter argues that fiscal expansion in such a situation with low inflation and wage repression will increase output rather than being constrained by rigidities and frictions, but will do little to reduce income inequality and increase the wage share unless there are changes in the institutional structure that result in wage repression.

Keywords: Wage repression; Conflicting claims inflation; Wage share; Income distribution; USA; Structuralist approach (search for similar items in EconPapers)
Date: 2025
ISBN: 9781803929903
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