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Functional distribution and wage inequality in recent Kaleckian growth models

Eckhard Hein and Franz Prante

No 110/2018, IPE Working Papers from Berlin School of Economics and Law, Institute for International Political Economy (IPE)

Abstract: This contribution provides a review of recent considerations of wage inequality in Kaleckian models of distribution and growth. On the one hand, we address modelling approaches in which a distinction is made between managers and workers, where the salaries of the former are treated as overhead costs in a target-return pricing framework. Distribution between profits and wages, and between managers and direct labour, will thus depend on the level of economic activity, in particular in a short-run cyclical perspective. On the other hand, we review more recent Kaleckian models, which explicitly introduce wage inequality, but maintain the simple mark-up pricing approach, thus abstracting from explicit consideration of overhead costs. Explicitly or implicitly, these models rather adhere to a medium-run perspective. Finally, we provide a simple neo-Kaleckian distribution and growth model with wage inequality, which allows for different medium-run demand regimes in a stylized way.

Keywords: functional income distribution; wage inequality; distribution; growth; Kaleckian models (search for similar items in EconPapers)
JEL-codes: E12 E25 D31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-gro, nep-mac and nep-pke
Date: 2018
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