Unbalanced distribution of income and Unbalanced Chinese Growth: Single Equation Estimations Based on Bhaduri/Marglin Model

Bruno Jetin, Ozan Ekin-Kurt and Anna Su

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Abstract: The primary motivation of this paper is to analyse the relationship between the functional income distribution and the Chinese economic growth for the period 1978-2010. We employ a demand-driven Kaleckian macroeconomic framework to evaluate the total effects of changes in the labour and profit income shares on components of final demand. It is one of the first applications of such a model to the Chinese economy. We use the theoretical model of Stockhammer, Onaran and Ederer (2009) one of the Bhaduri and Marglin (1990) seminal paper variants. This model shows that in a growth model driven by effective demand, long-run growth may be led either by wage or profit under some conditions. It then engenders an empirical problem to determine the characteristics of an accumulation regime in a given country. We utilise single equations to estimate the effects of the labour and profit income shares on the demand aggregates of China, namely consumption, investment and net exports. One of our contributions is reconstructing the statistical series for the period 1978-2010 to check the data, correct inconsistencies and be sure of their meaning as far as possible. The increase of labour income turns out to have a low impact on consumption for the whole period. As expected, an increment in the profit share promotes investment. However, changes in the labour income share turn out to have no impact on net exports. The total effect suggests that the accumulation regime in China is profit-led.

Keywords: development; growth regime; Post Keynesian economics; distribution of income shares; China; wage-led; profit-led (search for similar items in EconPapers)
Date: 2012-07-05
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-03244032v2
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Published in Political economy and the outlook for capitalism. Conference organised by AHE, IIPPE and AFEP, Jul 2012, Paris, France

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