Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/215636 
Year of Publication: 
2019
Series/Report no.: 
ifso working paper No. 4
Publisher: 
University of Duisburg-Essen, Institute for Socio-Economics (ifso), Duisburg
Abstract: 
The paper investigates how including the distribution of wealth changes the demand effects of redistributing functional income. It develops a model with an endogenous wealth distribution and shows that the endogenous rise in wealth inequality resulting from a redistribution towards profits weakens the growth effects of this redistribution. Consequently, a wage-led regime becomes more strongly wage-led. A profit-led regime on the other hand becomes less profit-led and there may even be a regime switch - in this case the short-run profit-led economy becomes wage-led in the long run due to the endogenous effects of wealth inequality. The paper thereby provides a possible explanation for the instability of demand regimes over time.
Subjects: 
Wealth
Distribution
Aggregate Demand
JEL: 
D31
D33
E12
E21
E25
E64
Creative Commons License: 
cc-by Logo
Document Type: 
Working Paper

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