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Sectoral Composition of Output and the Wage Share: a Two-Sector Kaleckian Model

Author

Listed:
  • Elton Beqiraj

    (Department of Economics and Law, Sapienza University of Rome (IT).)

  • Lucrezia Fanti

    (National Institute for Public Policy Analysis (INAPP).)

  • Luca Zamparelli

    (Department of Economics and Law, Sapienza University of Rome (IT).)

Abstract

This paper looks at structural change as one additional source of decline in the wage share. First, we provide a decomposition of changes in aggregate wage shares into changes due to variations in output composition and in sectoral wage shares for nine OECD countries between 1977 and 2010. We show that the rise in the service sector is a relevant factor in explaining the fall of the wage share, at least for some countries. Next, we develop a two-sector Kaleckian growth model consisting of the service and manufacturing sectors. We assume that structural change is exogenous as it arises from a shift in consumers' preferences or in the saving rate. We show that, when mark-ups are relatively higher in the service sector, a shift in the sectoral composition of demand in favor of the service sector good generates a rise in the profit share.

Suggested Citation

  • Elton Beqiraj & Lucrezia Fanti & Luca Zamparelli, 2019. "Sectoral Composition of Output and the Wage Share: a Two-Sector Kaleckian Model," Working Papers 3/19, Sapienza University of Rome, DISS.
    • Handle: RePEc:saq:wpaper:3/19
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    References listed on IDEAS

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    2. Herrendorf, Berthold & Rogerson, Richard & Valentinyi, Ákos, 2014. "Growth and Structural Transformation," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 6, pages 855-941, Elsevier.
    3. Lavoie, Marc & Ramirez-Gaston, Pablo, 1997. "Traverse in a Two-Sector Kaleckian Model of Growth with Target-Return Pricing," The Manchester School of Economic & Social Studies, University of Manchester, vol. 65(2), pages 145-169, March.
    4. Hiroki Murakami, 2018. "A two†sector Keynesian model of business cycles," Metroeconomica, Wiley Blackwell, vol. 69(2), pages 444-472, May.
    5. Nishi, Hiroshi, 2018. "A Dynamic Analysis of Demand and Productivity Growth in a Two-sector Kaleckian Model," MPRA Paper 86778, University Library of Munich, Germany.
    6. Nicholas Kaldor, 1961. "Capital Accumulation and Economic Growth," International Economic Association Series, in: D. C. Hague (ed.), The Theory of Capital, chapter 0, pages 177-222, Palgrave Macmillan.
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    Citations

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    Cited by:

    1. Stirati, Antonella & Paternesi Meloni, Walter, 2021. "Unemployment and the wage share: a long-run exploration for major mature economies," Structural Change and Economic Dynamics, Elsevier, vol. 56(C), pages 330-352.
    2. Lucrezia Fanti & Luca Zamparelli, 2021. "The paradox of thrift in a two‐sector Kaleckian growth model," Metroeconomica, Wiley Blackwell, vol. 72(3), pages 526-538, July.
    3. Nishi, Hiroshi, 2022. "Income distribution, technical change, and economic growth: A two-sector Kalecki–Kaldor approach," Structural Change and Economic Dynamics, Elsevier, vol. 60(C), pages 418-432.
    4. Murakami, Hiroki & Zimka, Rudolf, 2020. "On dynamics in a two-sector Keynesian model of business cycles," Chaos, Solitons & Fractals, Elsevier, vol. 130(C).
    5. Walter Paternesi Meloni & Antonella Stirati, 2021. "What has driven the delinking of wages from productivity? A political economy-based investigation for high-income economies," Working Papers PKWP2104, Post Keynesian Economics Society (PKES).

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    More about this item

    Keywords

    structural change; functional income distribution; manufacturing; service.;
    All these keywords.

    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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