Long-Run Growth and Income Distribution: Evidence for Italy and the US
Year: 2002
Type: article
Abstract: In this paper we investigate the long-run growth process in Italy and the US over the period 1920-2001, using a common trends model. Coherent with the neoclassical growth model, we find that long-run economic growth can be explained by two permanent shocks, namely a technological shock and a labour supply shock. Interestingly, technological progress has an initial negative impact on the wage share, and a successive positive, but transitory impact on income equality, pointing to a cycle in income distribution. On the other hand, the labour supply shock has a transitory and positive impact on the wage share for Italy, and a permanent and negative impact on the wage share for the US, possibly reflecting different labour market institutional characteristics. Hence, fluctuations in the distribution of income should be expected as a consequence of economic growth.
Source: Giornale degli Economisti
Author: Claudio Morana
Language: English
Topic: Economic Theory and Policy
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1521290103