A Kaldor Matching Model of Real Wage Declines

Michael Sattinger

No 380, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: A model linking macroeconomic phenomena and income distribution in balanced growth equilibria is developed as a variant to the Kaldor model of factor shares. It departs from the original Kaldor model in assuming equal savings rates and production determined by a matching process between workers and jobs. Macroeconomic equilibrium (national savings equal to investment) determines the ratio of jobs to employment and the ratio of unemployed to vacancies. Competitive microeconomic behavior then determines the wage and interest rates. Changes in the ratio of national debt to employment have real effects on factor prices. Implications for effects of taxes and unemployment benefits are derived. The model explains recent declines in real wages relative to productivity.

Keywords: efficient taxation; unemployment benefits; national debt; interest rate; real wage; Kaldor; matching; factor prices (search for similar items in EconPapers)
JEL-codes: D33 E1 H2 J31 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2001-10
New Economics Papers: this item is included in nep-pbe
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Published - published in: Journal of Economic Inequality, 2005, 3 (2), 91-108

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Related works:
Working Paper: A Kaldor Matching Model of Real Wage Declines (2003)
Working Paper: A Kaldor Matching Model of Real Wage Declines (2001)
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