{"title":"Is government debt a burden on workers' income share? An investigation on Italian dynamics","authors":"Rosaria Rita Canale, Rita De Siano","doi":"10.1007/s40888-024-00327-0","DOIUrl":null,"url":null,"abstract":"<p>This paper aims to explore if there is a connection between public debt and wage share; the intention is to contribute to the literature regarding both the efficacy of fiscal policy and financialisation of economics. The paper examines the case of Italy between 1960 and 2019, a rather long period during which the country, much like many other advanced economies, was affected by the contemporaneous presence of deteriorating public accounts and a reduced share of national income going to labour. The empirical analysis employs a long run dynamic technique and finds that an increase in debt decreases wage share, challenging the effect of fiscal policies on employment and national income. However, when distinguishing between the components fuelling debt, the estimates reveal controversial outcomes: primary deficit increases wage share, while interests in public debt decrease it. The results are consistent with the changes in policy strategy that occurred in three subperiods and suggest that public debt should be managed, accounting for the reciprocal effects of fiscal and monetary policy and considering the introduction of a common safe asset to preserve labour income.</p>","PeriodicalId":44858,"journal":{"name":"Economia Politica","volume":"87 1","pages":""},"PeriodicalIF":2.8000,"publicationDate":"2024-03-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Economia Politica","FirstCategoryId":"96","ListUrlMain":"https://doi.org/10.1007/s40888-024-00327-0","RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
This paper aims to explore if there is a connection between public debt and wage share; the intention is to contribute to the literature regarding both the efficacy of fiscal policy and financialisation of economics. The paper examines the case of Italy between 1960 and 2019, a rather long period during which the country, much like many other advanced economies, was affected by the contemporaneous presence of deteriorating public accounts and a reduced share of national income going to labour. The empirical analysis employs a long run dynamic technique and finds that an increase in debt decreases wage share, challenging the effect of fiscal policies on employment and national income. However, when distinguishing between the components fuelling debt, the estimates reveal controversial outcomes: primary deficit increases wage share, while interests in public debt decrease it. The results are consistent with the changes in policy strategy that occurred in three subperiods and suggest that public debt should be managed, accounting for the reciprocal effects of fiscal and monetary policy and considering the introduction of a common safe asset to preserve labour income.
期刊介绍:
This journal publishes peer-reviewed articles that link theory and analysis in political economy, promoting a deeper understanding of economic realities and more effective courses of policy action. Established in 1984, the journal has kept pace with the times in disseminating high-quality and influential research aimed at establishing fruitful links between theories, approaches and institutions. With this relaunch (which combines Springer’s worldwide scientific scope with the Italian cultural roots of il Mulino and Fondazione Edison, whose research has been published by the two mentioned publishers for many years), the journal further reinforces its position in the European and international economic debate and scientific community. Furthermore, this move increases its pluralistic attention to the role that – at the micro, sectoral, and macro level – institutions and innovation play in the unfolding of economic change at different stages of development.