Wage-led growth: An introduction

Engelbert Stockhammer

No 2011-1, Economics Discussion Papers from School of Economics, Kingston University London

Abstract: The past decades have witnessed falling wage shares and a polarization of personal income distribution. Average wages and average labour compensation have not kept up with productivity growth. Functional income distribution has shifted at the expense of labour. In many countries personal income distribution has also become more unequal. By many measures income inequality is worse than at any time in the 20th century. At the same time economic growth processes have become imbalanced. Financial crises have become more frequent; household debts have risen sharply; international imbalances have increased, with some countries relying excessively on export growth. This paper argues that the polarization of income distribution and the decline in the wage share play an important role in the generation of imbalanced and unequal growth, and that a pro-labour wage policy will form an important part of a policy package that generates a stable growth regime. A wage-led growth strategy is thus advocated.

Keywords: Wage-led growth; income distribution; Keynesian economics; economic policy (search for similar items in EconPapers)
JEL-codes: E60 E61 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2011-07-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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