Wage bargaining and induced technical change in a linear economy: Model and application to the US (1963–2003)

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractIn a simple one-sector, two-class, fixed-proportions economy, wages are set through axiomatic bargainingà la Nash [17]. As for choice of technology, firms choose the direction of factor augmentations to maximize the rate of unit cost reduction (Kennedy [14], and more recently Funk [10]). The aggregate environment resulting by self-interested decisions made by economic agents is described by a two-dimensional dynamical system in the employment rate and output/capital ratio. The economy converges cyclically to a long-run equilibrium involving a Harrod-neutral profile of technical change, a constant rate of employment of labor, and constant input shares. The type of oscillations predicted by the model matches the available data on the United States . Finally, institutional change, as captured by variations in workers' bargaining power, has a positive effect on the rate of output growth but a negative effect on employment.------

Marx‐biased technical change and income distribution: A panel data analysis

“…We take these empirical results as pointing toward an institutional rather than purely technological determination of the factor income distribution. As such, our results are complementary to a growing literature on biased technical change and labor market institutions in models of growth and distribution that do not rely on Neoclassical production functions (a few examples of which can be found in Duménil and Lévy (), Franke (), Julius (), Tavani (), Zamparelli (), Brugger and Gehrke ()). Modeling efforts aimed at shedding light on the interaction between growth and distribution and its implication for economic development should focus on the institutional causes that affect the distribution of income, as well as their implications for technology adoption and capital accumulation.…”

Endogenous Technical Change in Alternative Theories of Growth and Distribution

“…This expression is formally identical to equation , but it does not assume constant capital productivity. The microeconomic appeal of the induced innovation hypothesis has led to a renewed interest to this theory in recent years (Foley, ; Julius, ; Rada, ; Tavani, , ; Zamparelli, ).…”

“…Tavani (; ) uses a Nash bargaining mechanism between workers and capitalists in order to endogenize wage‐setting in this model. As a result, there is no independent dynamic equation for the labor share, and the shape of the IPF determines the long‐run employment rate.…”

Real wages and labor-saving technical change: evidence from a panel of manufacturing industries in mature and labor-surplus economies

“…By combining the two causal links, they yield complete accounts of the time path of real wages, factor shares, and labor and capital productivity (Foley, 2003;Julius, 2005;Tavani, 2012). With surplus-driven investment behavior, these contributions give rise to a steady-state with Harrod-neutral technical change, as well as a constant employment rate and constant factor shares.…”

“…Several authors have recently combined the notions of directed technical change and distributive conflict to develop a unified account of the evolution of real wages, labor productivity, and factor shares that explains these stylized facts (Foley, 2003;Julius, 2005;Tavani, 2012). This paper empirically examines the main predictions of these and related theories.…”