Is aggregate demand wage-led or profit-led? National and global effects
Bibliographic record
Abstract
This paper estimates the effects of a change in the wage share on growth in the G20 countries using a post-Keynesian/post-Kaleckian model, analyses the interactions among different economies, and calculates the global multiplier effects of a simultaneous decline in the wage share. At the national level, a decrease in the wage share leads to lower growth in the euro area, Germany, France, Italy, UK, US, Japan, Turkey, and Korea, i.e. these economies are wage-led, whereas it stimulates growth in Canada, Australia, Argentina, Mexico, China, India, and South Africa; thus the latter group of countries are profit-led. However, a simultaneous decline in the wage share in all these countries leads to a decline in global growth. Furthermore, Canada, Argentina, Mexico, and India also contract when they decrease their wage-share along with their trading partners. Thus the global economy in aggregate is wage-led. The policy conclusions of the paper shed light on the limits of strategies of international competitiveness based on wage competition in a highly integrated global economy, and point at the possibilities to correct global imbalances via coordinated macroeconomic and wage policy, where domestic demand plays an important role. There is room for a wage-led recovery in the global economy based on a simultaneous increase in the wage shares, where global GDP as well as all individual countries can grow.
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How this classification was reachedexpand
Full frame distilled prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. Learned from the 10,348 direct Codex labels and 10,348 direct Gemma labels. Candidate is the union of thresholded teacher heads; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels or direct frontier model labels.
Codex and Gemma teacher scores by category
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.004 | 0.001 |
| Meta-epidemiology (narrow) | 0.002 | 0.002 |
| Meta-epidemiology (broad) | 0.003 | 0.001 |
| Bibliometrics | 0.002 | 0.002 |
| Science and technology studies | 0.001 | 0.002 |
| Scholarly communication | 0.000 | 0.002 |
| Open science | 0.002 | 0.002 |
| Research integrity | 0.004 | 0.006 |
| Insufficient payload (model declined to judge) | 0.000 | 0.001 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; both teacher heads agree on what is shown here.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".