This is interesting. http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2013/09/on-wage-led-growth.html
Chris Dillow deduces periods where growth in the UK is 'wage-led', when capitalists are investing in anticipation of high aggregate demand. (The graph shows the lagged response.)
The high aggregate demand is the result of a lower profit share: more is going to labour, and workers spend more of their money.
This is the case when the graph is negative.
When the graph is positive, labour's share of income is lower. Growth is driven by investment, aggregate demand increasing because of greater demand for capital.
Presumably there are many omitted variables (this is just a back of the envelope regression).
I should think there are a lot. This is thinking according to a Marxist straightjacket. Contemporary monetarists were explicit that monetary policy controls aggregate demand, and that this loophole could be used to defy the Marxist model Dillow follows.
The sharp change in 1985 is because lower than average growth rates are falling at a time when the labour share of income is falling. Or is this because we are moving along a concave Solow curve. More investigation is needed.
(Some time later:)
Here is a graph of wages and productivity. Labour is taking more than it's earned in productivity increases in two periods of recent history. The bad days of stagflation from 1973-7 (and briefly in 1979), then again from 1989-93, once the Lawson bubble popped. The era of labour repression after falling out of ERM looks worse than the initial Thatcherite period. Perhaps the gap shrinks because of the minimum wage implementation.
This is from a paper on recent productity growth, arguing that this picture is unbalanced, not taking into account relative costs of labour and capital.
Chris Dillow deduces periods where growth in the UK is 'wage-led', when capitalists are investing in anticipation of high aggregate demand. (The graph shows the lagged response.)
The high aggregate demand is the result of a lower profit share: more is going to labour, and workers spend more of their money.
This is the case when the graph is negative.
When the graph is positive, labour's share of income is lower. Growth is driven by investment, aggregate demand increasing because of greater demand for capital.
Presumably there are many omitted variables (this is just a back of the envelope regression).
I should think there are a lot. This is thinking according to a Marxist straightjacket. Contemporary monetarists were explicit that monetary policy controls aggregate demand, and that this loophole could be used to defy the Marxist model Dillow follows.
The sharp change in 1985 is because lower than average growth rates are falling at a time when the labour share of income is falling. Or is this because we are moving along a concave Solow curve. More investigation is needed.
(Some time later:)
Here is a graph of wages and productivity. Labour is taking more than it's earned in productivity increases in two periods of recent history. The bad days of stagflation from 1973-7 (and briefly in 1979), then again from 1989-93, once the Lawson bubble popped. The era of labour repression after falling out of ERM looks worse than the initial Thatcherite period. Perhaps the gap shrinks because of the minimum wage implementation.
This is from a paper on recent productity growth, arguing that this picture is unbalanced, not taking into account relative costs of labour and capital.
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