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Distribution†Utilization Interactions: A Race†to†the†Bottom Among Oecd Countries

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  • Codrina Rada
  • David Kiefer

Abstract

We explore four decades of short†and long†run interactions between income distribution and real economic activity for a panel of OECD countries. Our regressions suggest that the dynamic interaction of these two variables is rather complicated. Estimating the long†run point, we argue that this equilibrium has been shifting as a matter of public policy. We hypothesize that a race†to†the†bottom arises from a need to be competitive in globalized markets. We report evidence that globalization does have a negative long†run effect on the wage share. We also find that other factors may have been important: unionization appears to be pro†wage share, while contractionary monetary policy, financialization, and a lower relative price of investment goods tend to be anti†wage share.

Suggested Citation

  • Codrina Rada & David Kiefer, 2016. "Distribution†Utilization Interactions: A Race†to†the†Bottom Among Oecd Countries," Metroeconomica, Wiley Blackwell, vol. 67(2), pages 477-498, May.
  • Handle: RePEc:bla:metroe:v:67:y:2016:i:2:p:477-498
    DOI: 10.1111/meca.12081
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    Cited by:

    1. Jose Barrales‐Ruiz & Ivan Mendieta‐Muñoz & Codrina Rada & Daniele Tavani & Rudiger von Arnim, 2022. "The distributive cycle: Evidence and current debates," Journal of Economic Surveys, Wiley Blackwell, vol. 36(2), pages 468-503, April.
    2. David Kiefer & Ivan Mendieta-Muñoz & Codrina Rada & Rudiger von Arnim, 2020. "Secular Stagnation and Income Distribution Dynamics," Review of Radical Political Economics, Union for Radical Political Economics, vol. 52(2), pages 189-207, June.
    3. Vinicius Curti Cícero & Daniele Tavani, 2024. "Institutional changes, effective demand and inequality: a structuralist model of secular stagnation," Working Papers PKWP2410, Post Keynesian Economics Society (PKES).
    4. Ivan Mendieta-Munoz & Codrina Rada & Marcio Santetti & Rudiger von Arnim, 2020. "The US labour share of income: What shocks matter?," Working Paper Series, Department of Economics, University of Utah 2020_02, University of Utah, Department of Economics.
    5. Peter Skott, 2024. "Conflict inflation: Keynesian path dependency or Marxian cumulation?," Working Papers PKWP2406, Post Keynesian Economics Society (PKES).
    6. Codrina Rada & Ansel Schiavone & Rudiger von Arnim, 2022. "Goodwin, Baumol & Lewis: How structural change can lead to inequality and stagnation," Metroeconomica, Wiley Blackwell, vol. 73(4), pages 1070-1093, November.

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