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Amitava Krishna Dutt

possible. The reason for the ambiguity is that although the rise in the real wage may increase aggregate demand, the implied reduction in the profit share can well reduce investment demand due to a reduction of expected profitability, and can worsen the external trade balance by reducing external competitiveness, both of which reduce aggregate demand. If the expansionary effect dominates, we have what Bhaduri and Marglin called the stagnationist case, while if the contractionary effect dominates we have their exhilarationist case. Bhaduri and Marglin's paper has spawned

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Søren Harck

the rule rather than the exception that the real wage in some sense appears as an argument in the nominal-wage dynamics. Admittedly, quite often it is the wage-share level rather than the real-wage level which appears and is referred to as the error-correction term in the wage equation. And in a closed-economy setting, at least, wage-share error correction can indeed be seen as but a minor generalization of real-wage error correction. After all, a concern for the wage share as such can be interpreted as a concern for the product real wage relative to

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Verónica De Jesús Romo and Julio López Gallardo

1 INTRODUCTION Determining the real exchange rate (RER) of one currency with respect to another is one of the basic concerns of open-economy macroeconomics. The objective of this paper is to provide empirical evidence about the influence of one particular variable, the wage share , on the exchange rate. There are many empirical studies dealing with the determinants of the exchange rate. In addition, there are numerous theoretical studies regarding the association between the wage share and the exchange rate (for example, Kalecki 1939 ; Carlin and Soskice 2006

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Jan Toporowski

3. Kaleckian reflections on the wage share in recent Post-Keynesian controversies Jan Toporowski In a lecture on the occasion of the award of an honorary doctorate at the University of Warsaw, his first formal qualification in Economics, Michał Kalecki (1964) tried to answer the issue of ‘Why economics is not an exact science’. After all, like theoretical physics, economics is a quantitative science: Both are quantitative disciplines which, on the basis of general premises derived from the knowledge of real phenomena, develop a deductive system which is then

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Engelbert Stockhammer and Ozlem Onaran

macroeconomics has long asserted that a higher wage share will have expansionary effects. In the models of Kalecki (1971) and Steindl (1952) , an increase in the wage share unambiguously leads to an increase in effective demand. Bhaduri and Marglin (1990) , among others, distinguished between wage-led and profit-led demand regimes. The model they proposed was intended as a generalization of Keynesian and Kaleckian models, to allow for classical mechanisms. Their typology has since given rise to a rich empirical literature. This paper presents one-country and two

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Luke Petach

1 INTRODUCTION This paper is yet another entry in the seemingly interminable debate on wage- versus profit-led growth. It is difficult to forge new paths on well-trodden ground, but doing so is easier if one has new instruments with which to set out. In this paper I bring along some such instruments – both figuratively and literally. Using a panel of US states for the years 1974–2014, I estimate a demand-and-distribution system. To identify the effect of changes in the labor share on capacity utilization, I make use of variations in state-level redistributive

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J.E. King

continuing decline in the wage share of GDP in almost all Organisation for Economic Co-operation and Development (OECD) countries. In Section 4 I consider and reject the objection that, since ‘wage theft’ applies only to the lowest-paid, it is a problem of social justice with no significant macroeconomic implications. Section 5 discusses the policy implications. Finally, in Section 6 , I draw some pessimistic conclusions concerning the prospects for labour market re-regulation, which is a necessary but probably unachievable condition for wage-led growth. 2 THE

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Barry T. Hirsch, David A. Macpherson and Anne E. Preston

/05/2018 10:49 Nonprofit wages  149 W W2 S W1 D L1 D2 L L2 Figure 8.1  Labor market equilibria for nonprofit occupations with heterogeneous preferences when labor demand is high relative to supply. Jones (2015) confirms this prediction using 2000 census data. He finds substantive nonprofit wage penalties in job sectors (measured by industry-by-location) with a small share of nonprofits, but no wage penalties in job sectors with high nonprofit shares. As argued previously, wages in the nonprofit sector, and therefore the nonprofit wage differential, depend on the

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Özlem Onaran

effects with the negative effects on consumption. Demand plays a central role in determining growth, and functional income distribution between wages and profits has a crucial effect on demand. The total effect of the decrease in the wage share on aggregate demand of the private sector (households and firms) depends on the relative size of the reactions of consumption, private investment and net exports to changes in income distribution. If the total effect is negative, the demand regime is called wage-led; otherwise the regime is profit-led. Theoretically, both are

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Robert A. Blecker

. Hence, demand is wage-led if the positive effect of a higher wage share on consumption dominates the potentially negative effects on investment and net exports, and is profit-led in the opposite case ( Blecker 2002 ; Lavoie and Stockhammer 2013 ; Hein 2014 ). Even if demand is wage-led, economic growth (capital accumulation) can be either wage- or profit-led, depending on whether the positive effect of a higher wage share on capacity utilization is strong enough to outweigh the direct negative impact of lower profitability on investment. 1 Since the possibility that