Show Summary Details
You do not have access to this content

The origins and evolution of the debate on wage-led and profit-led regimes*

Marc Lavoie

Keywords: overhead labour costs; wage-led regimes; profit squeeze; neo-Kaleckian models; growth and distribution

While Kaleckian authors tend to find that economies are in a wage-led demand regime, Goodwinian authors tend to find that economies are in a profit-led demand regime. This paper avoids econometric technicalities and provides instead a historical perspective, going back to the empirical study of Boddy and Crotty and that of Weisskopf, as well as to the debates that arose in the 1980s between but also within the two main strands of heterodox macroeconomics: the Marxians and the post-Keynesians. This hopefully will help to shed some light on the more recent controversy over the existence of profit-led or wage-led demand regimes. A noteworthy feature of the paper is the emphasis on the existence of overhead labour costs and hence the distinction between managers and ordinary workers. These are likely to bias empirical measurements of demand regimes towards the profit-led regime at high-frequency data; they may also give rise to paradoxical results; and they justify the claim that an increase in the wage share of ordinary workers is likely to have a positive effect on aggregate demand even if economies are profit-led.

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information

or login to access all content.