Change in income distribution and aggregate spending: constraints on full-employment?

Arestis, Philip; Howells, Peter

doi:10.1080/09538259500000035

Cited by 2 publications

(2 citation statements)

References 21 publications

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“…Engen and Gale (2000), though, found that savings incentives seem to be more effective in raising savings for low income earners, and not for high income ones (Engen and Gale, 2000). In comparison, several studies suggest a negative connection between inequality and aggregate demand (Arestis and Howell, 1995;Brown, 2004;Pressman, 1997).…”

Section: Inequality and The Macroeconomymentioning

confidence: 98%

Inequality and Household Economic Hardship in the United States of America

2006

UN Department of Economic and Social Affairs (DESA) Working Papers

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Income inequality in the United States of America has increased over the past few decades. Along with this development, employee compensation as a share of national income has tended to decline, the profi t share of national income has grown, and inequality within labour has risen. There is no empirical support for the argument that greater inequality has resulted in faster productivity growth, but there is some indication that rising inequality has been connected to slower demand growth. Increased access to credit may have temporarily muted the implications of greater income inequality.

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Section: Inequality and The Macroeconomymentioning

confidence: 98%

Inequality and Household Economic Hardship in the United States of America

2006

UN Department of Economic and Social Affairs (DESA) Working Papers

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“…A greater concentration of total income among higher income earners may reduce aggregate demand growth as higher income earners have a lower marginal propensity to consume and thus are more prone to save than lower income households (Keynes, 1936). Empirical analyses of macro data show that inequality does indeed reduce growth of aggregate demand (Arestis and Howell, 1995;Brown, 2004;Pressman, 1997).…”

Section: V2 Inequality and Demandmentioning

confidence: 99%

Unequal Fortunes, Unstable Households: Has Rising Inequality Contributed to Economic Troubles for Households in the USA?

Boushey¹,

Weller²

2006

Wages, Employment, Distribution and Growth

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The distribution of national income between capital and labor has become more unequal as has the distribution within labor. At the same time that inequality rose, consumer debt and household economic distress grew, too. The evidence on a positive link between rising inequality and innovation is not supported by the data. The data either suggest no connection or a potential negative link. In comparison, the link between growing inequality and aggregate demand is somewhat ambiguous. One way to clarify this ambiguity is the possibility that debt has increased and that it has increased more among low income households, particularly in the form of credit cards and non-bank credit. We find that credit card debt is especially sensitive to changes in inequality and that rising inequality may thus have contributed to rising personal bankruptcies.

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Change in income distribution and aggregate spending: constraints on full-employment?

Cited by 2 publications

References 21 publications

Inequality and Household Economic Hardship in the United States of America

Inequality and Household Economic Hardship in the United States of America

Unequal Fortunes, Unstable Households: Has Rising Inequality Contributed to Economic Troubles for Households in the USA?

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