Wage-led or profit-led: is it the right question to examine the relationship between income inequality and economic growth? Insights from an empirical stock-flow consistent model for Denmark

For the last two decades an increasing number of empirical studies have analysed the relationship between income inequality and economic growth by classifying economies as either wage-led or profit-led. However, some critiques have claimed that rather than being unequivocally wage-led or profit-led,...

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Autores principales: Byrialsen, Mikael Randrup, Valdecantos, Sebastián, Raza, Hamid
Publicado: Oxford University Press 2024
Acceso en línea:https://nulan.mdp.edu.ar/id/eprint/4308/
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Nulan - Fac.Cs.Económicas (UNMdP) de Universidad Nacional de Mar del Plata (UNMdP)
id I29-R135-4308
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spelling I29-R135-43082025-05-14T13:19:48Z Wage-led or profit-led: is it the right question to examine the relationship between income inequality and economic growth? Insights from an empirical stock-flow consistent model for Denmark Byrialsen, Mikael Randrup Valdecantos, Sebastián Raza, Hamid For the last two decades an increasing number of empirical studies have analysed the relationship between income inequality and economic growth by classifying economies as either wage-led or profit-led. However, some critiques have claimed that rather than being unequivocally wage-led or profit-led, the growth regime of an economy might depend on the circumstances and the nature of the processes that determine income distribution. Using an empirical stock-flow consistent (SFC) model estimated for Denmark for 2005-2020 we run eight scenarios simulating changes in policy, structural and institutional variables to see how each affects income distribution and, through it, the business cycle and economic growth. We find that the relationship between demand, growth and income distribution is highly dependent on the source of the shock affecting income shares, its impact on the other areas of the economy and the intensity of feedback effects. Oxford University Press 2024-01-13 https://nulan.mdp.edu.ar/id/eprint/4308/ Cambridge Journal of Economics, 48(2), 303-328. ISSN 1464-3545. 10.1093/cje/bead054 <https://doi.org/10.1093/cje%2Fbead054> Dinamarca info:eu-repo/semantics/altIdentifier/doi/10.1093/cje/bead054
institution Universidad Nacional de Mar del Plata (UNMdP)
institution_str I-29
repository_str R-135
collection Nulan - Fac.Cs.Económicas (UNMdP)
description For the last two decades an increasing number of empirical studies have analysed the relationship between income inequality and economic growth by classifying economies as either wage-led or profit-led. However, some critiques have claimed that rather than being unequivocally wage-led or profit-led, the growth regime of an economy might depend on the circumstances and the nature of the processes that determine income distribution. Using an empirical stock-flow consistent (SFC) model estimated for Denmark for 2005-2020 we run eight scenarios simulating changes in policy, structural and institutional variables to see how each affects income distribution and, through it, the business cycle and economic growth. We find that the relationship between demand, growth and income distribution is highly dependent on the source of the shock affecting income shares, its impact on the other areas of the economy and the intensity of feedback effects.
author Byrialsen, Mikael Randrup
Valdecantos, Sebastián
Raza, Hamid
spellingShingle Byrialsen, Mikael Randrup
Valdecantos, Sebastián
Raza, Hamid
Wage-led or profit-led: is it the right question to examine the relationship between income inequality and economic growth? Insights from an empirical stock-flow consistent model for Denmark
author_facet Byrialsen, Mikael Randrup
Valdecantos, Sebastián
Raza, Hamid
author_sort Byrialsen, Mikael Randrup
title Wage-led or profit-led: is it the right question to examine the relationship between income inequality and economic growth? Insights from an empirical stock-flow consistent model for Denmark
title_short Wage-led or profit-led: is it the right question to examine the relationship between income inequality and economic growth? Insights from an empirical stock-flow consistent model for Denmark
title_full Wage-led or profit-led: is it the right question to examine the relationship between income inequality and economic growth? Insights from an empirical stock-flow consistent model for Denmark
title_fullStr Wage-led or profit-led: is it the right question to examine the relationship between income inequality and economic growth? Insights from an empirical stock-flow consistent model for Denmark
title_full_unstemmed Wage-led or profit-led: is it the right question to examine the relationship between income inequality and economic growth? Insights from an empirical stock-flow consistent model for Denmark
title_sort wage-led or profit-led: is it the right question to examine the relationship between income inequality and economic growth? insights from an empirical stock-flow consistent model for denmark
publisher Oxford University Press
publishDate 2024
url https://nulan.mdp.edu.ar/id/eprint/4308/
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