Essays on secular stagnation, income and wealth distribution, and employment
Date
2023
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Abstract
After the publication of Piketty's Capital in the XXI Century and Robert Gordon's The Rise and Fall of American Growth, mainstream economics has shifted its attention to the distribution of income and wealth and how they interact with economic growth. This dissertation focuses on the interaction between distribution and secular stagnation, as well as the ultimate long run effects on employment at the macro level. The first chapter empirically investigates the short -and long- run interaction between labor productivity and real wages and their ultimate impact on the labor market for a panel of 25 OECD countries. The second chapter presents a theoretical and empirical model of secular stagnation, income and wealth distribution, and employment in the Classical-Marxian tradition. In this model, institutional or technological shocks to income distribution lower the wage share, increase wealth inequality, and decrease the income-capital ratio in the long run. The ultimate effect on long run employment depends on the relative strength of the response of labor-augmenting technical change vis-à-vis the response of real wage growth to labor market institutions. An empirical test of the model using time-series data for the US (1960-2019) appears to support its main implications. The third chapter extends the second chapter's model by endogenizing the growth rate of the labor force to employment in an open economy. The model is more appropriate for economies at the low or middle stages of development, where the labor force depends significantly on demographic factors like high variations in the birth rate or immigration. I then empirically test the model using time-series data from China (1990-2019) and India (1970-2019) to validate the framework.
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Subject
employment
real wages
wage share
labor productivity
distribution
secular stagnation