Structural Changes and Growth Regimes

57 Pages Posted: 20 Jun 2017 Last revised: 21 May 2018

See all articles by Tommaso Ciarli

Tommaso Ciarli

SPRU, University of Sussex

Andre Lorentz

University of Strasbourg, BETA, CNRS

Marco Valente

University of L'Aquila; University of Sussex - Science and Technology Policy Research Unit (SPRU); Ruhr Universit├Ąt Bochum

Maria Savona

University of Sussex

Date Written: June 14, 2017

Abstract

We study the relation between income distribution and growth mediated by structural changes on the demand and supply side. Using results from a multi-sector growth model we compare two growth regimes which differ in three aspects: labour relations, competition, and consumption patterns. Regime one, similar to Fordism, is assumed to be relatively less unequal, more competitive, and with more homogeneous consumers than regime two, similar to post-Fordism. We analyse the parameters that define the two regimes to study the role of exogenous institutional features and endogenous structural features of the economy on output growth, income distribution, and their relation. We find that regime one exhibits significantly lower inequality, higher output and productivity, and lower unemployment than regime two. Both institutional and structural features explain these difference. Most prominent among the first group are wage differences, accompanied by capital income, and the distribution of bonuses to top managers. The concentration of production magnifies the effect of wage differences on income distribution and output growth, suggesting the relevance of the norms of competition. Among structural determinants, particularly relevant are firm organisation and the structure of demand. The way in which final demand distributes across sectors influences competition and overall market concentration. Particularly relevant is the demand of the least wealthy classes. We also show how institutional and structural determinants are tightly linked. Based on this link we conclude by discussing a number of policy implications emerging from our model.

Keywords: Structural Change; Income Distribution; Competition; Consumption Behaviour; Technological Change

JEL Classification: O41; L16; C63; O14

Suggested Citation

Ciarli, Tommaso and Lorentz, Andre and Valente, Marco and Savona, Maria, Structural Changes and Growth Regimes (June 14, 2017). SWPS 2017-12. Available at SSRN: https://ssrn.com/abstract=2989560 or http://dx.doi.org/10.2139/ssrn.2989560

Tommaso Ciarli (Contact Author)

SPRU, University of Sussex ( email )

Jubilee Building
University of Sussex
Falmer, Brighton, Sussex BN1 9SL
United Kingdom

Andre Lorentz

University of Strasbourg, BETA, CNRS ( email )

France

Marco Valente

University of L'Aquila ( email )

Piazza del Santuario, 19
Roio Poggio - L'Aquila, 67040
Italy

University of Sussex - Science and Technology Policy Research Unit (SPRU) ( email )

Mantell Building
Falmer
Brighton BN1 9RH UK, Sussex
United Kingdom

Ruhr Universit├Ąt Bochum ( email )

Faculty of Management and Economics
Chair of International Economics
Bochum, 44780
Germany

Maria Savona

University of Sussex ( email )

Sussex House
Falmer
Brighton, Sussex BNI 9RH
United Kingdom

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