Distribution and Steady-State Growth Revisited

Abstract

Motivated by extensions to the neo-Goodwinian framework pioneered by Lance Taylor, this paper investigates the two-way interaction between growth and distribution. A particular focus is the effects of distribution on both the equilibrium and natural rates of growth, and the reconciliation of these growth rates in a steady-state configuration. A model is developed in which medium-run growth is profit-led, but steady-state growth is wage-led. This result is shown to be robust to the introduction of different sources of technical change, and the demand- and supply-side effects of human capacities accumulation.