Wage share and aggregate demand: Contributions for labour and macroeconomic policy

JAVIER LINDENBOIM; DAMIÁN KENNEDY; JUAN M. GRAÑA

Ginebra

Conferencia; The Second Conference of the Regulating for Decent Work network; 2011

Organización Internacional del Trabajo

In recent years, economic growth strategies of the so-called “underdeveloped” or “in development” countries have focused on expanding their exports. In that scheme, wage compression is necessary in order to compensate the observed slow productivity pace achieving, therefore, “competitiveness”. The core of this discussion is, undoubtedly, how the national product is appropriated through wages and surplus, i.e. the factorial income distribution. In spite of its importance for every economic theory and the fundamental role it had in Latin-American economic debate and research, this analysis has been progressively abandoned since the seventies. Fortunately, this tendency has started to revert during recent years. This paper is in line with that theme because it is the starting point for the study of, at least, two key aspects of the economic trends of any country. In fact, the study of functional income distribution reveals, on one hand, the way in which labour force is employed, by analysing the relationship between real wage and productivity. On the other, how income (wages and surplus) is used in the acquisition of consumption or investment goods, and therefore shapes aggregate demand trends. In this context, the aim of the present document is to analyze the long term impoverishment of Argentinean workers from those perspectives, taking into account what has happened in other countries in order to distinguish which factors are domestic, which regional and, finally, which are the result of changes in global economic trends. For that objective, we choose two types of countries: the so-called “developed” ones, and the Latin American ones. In the first group, we will work with the United States, Japan and France (which have some differences between them), while for the second group we will focus on the largest regional economies: Brazil and Mexico. As these transformations are long term based, our analysis starts in the 1950s.