Show Summary Details
You do not have access to this content

Bhaduri–Marglin meet Kaldor–Marx: wages, productivity and investment

Servaas Storm and C.W.M. Naastepad

Keywords: wage-led growth; distribution; employment

Higher real wages provide macroeconomic benefits in terms of increased demand if the economy is wage-led (as in most European economies) and of higher labour productivity growth and more rapid technological progress. Taking these benefits into account, we show that a wage-led economy becomes less strongly wage-led. The impact of higher real wage growth on employment growth becomes ambiguous. But for model parameter values which are realistic for the wage-led eurozone, higher real wages reduce employment growth. Contrariwise, real wage restraint in a weakly wage-led economy generates jobs – as recent European experience underscores. This internal contradiction in wage-led economies can be overcome if a high wage regime is complemented by supportive fiscal and monetary policies.

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.