This paper presents a theoretical and empirical investigation of how changes in the size distribution of income can affect aggregate demand and the demand regime of an economy. After presenting empirical evidence for the US economy that the propensity to save increases significantly from the bottom to the top quintile of wage earners, we demonstrate that more equal distributions always lead to higher output in the traditional neo-Kaleckian macroeconomic model. We also present conditions under which a reduction of income inequality among workers turns demand more wage-led. This view is supported by the results of an econometric study for the United States (1967-2010) which show that the rise after 1980 in income inequality has made the US economy more profit-led.

Reducing energy demand has become a key mechanism for limiting climate change, but practical problems with large energy savings in a growing global economy and, importantly, in its lower-income parts remain. Using new energy-GDP data, we show that adopting the same near-term low-energy growth trajectory in all regions in IPCC scenarios limiting global warming to 1.5°C presents an unresolved policy challenge.We discuss this challenge of combining energy demand reductions with robust income growth for the 6.4 billion people in middle and low income countries in light of economic development's reliance on industrialisation. Our results highlight the importance of addressing limits to energy demand reduction in integrated assessment modelling when regional economic development is powered by industrialization and instead exploring faster energy supply decarbonization. Insights from development economics and other disciplines could help generate plausible assumptions given the financial, investment and stability issues involved.Limiting global warming to 2°C or even 1.5°C requires carbon emissions from energy to reach net zero by around mid-century 1 . Reducing energy demand is considered a key mechanism for emissions reduction and alleviates the burden on the two other principal measures: decarbonisation of the energy supply, and carbon dioxide removal (CDR) 2 . However, energy is key for the economy. The implications for global and regional economic growth of reducing energy demand are insufficiently explored but central in integrated assessment models (IAMs).Scenarios from IAMs synthesized in the IPCC Special Report on Global Warming of 1.5°C imply that absolute decoupling (i.e. reducing energy consumption while growing GDP) is both readily feasible and inexpensive 3 . The report presents 90 scenarios limiting the temperature increase to 1.5°C by 2100. In the near term, all continue or exceed historically