Income Distribution and Growth: A Global Model

This paper estimates the effects of a change in the wage share on growth at global level in the G20 countries. A decrease in the wage share in isolation leads to lower growth in the euro area, Germany, France, Italy, the UK, the US, Japan, Turkey, and South Korea, whereas it stimulates growth in Can...

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Bibliographic Details
Published in:Environment and planning. A 2014-10, Vol.46 (10), p.2489-2513
Main Authors: Onaran, Özlem, Galanis, Giorgos
Format: Article
Language:English
Subjects:
Argentina
Australia
Bgi / Prodig
Canada
China
Economic growth
Economic growth. Development
France
G-20
Germany
Human geography
Income distribution
India
Italy
Japan
Mexico
Political and economic geography
South Africa
South Korea
Turkey
U.S.A
United Kingdom
Wage differentials
Wages
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Summary:This paper estimates the effects of a change in the wage share on growth at global level in the G20 countries. A decrease in the wage share in isolation leads to lower growth in the euro area, Germany, France, Italy, the UK, the US, Japan, Turkey, and South Korea, whereas it stimulates growth in Canada, Australia, Argentina, Mexico, China, India, and South Africa. However, a simultaneous decline in the wage share in all these countries leads to a decline in global growth. Furthermore, Canada, Argentina, Mexico, and India also experience negative effects on growth when they decrease their wage share along with their trading partners. The results indicate that the global decline in labour share has had significant negative effects on growth.
ISSN:0308-518X
1472-3409
DOI:10.1068/a46265