Theory Of Income Distribution Research Articles

Marx-Biased Technical Change and Income Distribution: A Panel Data Analysis

This paper provides a further empirical evaluation of the Neoclassical theory of distribution as opposed to Marx-biased technical change (MBTC) by applying the theoretical and empirical framework developed by Foley and Michl (1999), Michl (1999, 2009) and Basu (2010) to a panel of countries. Basu (2010) developed a test based on cross-sectional data: we argue that a panel data analysis is instrumental in increasing the efficiency and validity of the test. Our results generalize Basu’s findings in providing support for MBTC and against the Neoclassical theory of income distribution.

A Contribution to Theory of Factor Income Distribution, Cambridge Capital Controversy and Equity Premium Puzzle

Under very general conditions, we construct a micro-macro model for closed economy with a large number of heterogeneous agents. By introducing both financial capital (i.e. valued capital—equities of firms) and physical capital (i.e. capital goods), our framework gives a logically consistent, complete factor income distribution theory with micro-foundation. The model shows factor incomes obey different distribution rules at the micro and macro levels, while marginal distribution theory and no-arbitrage princi-ple are unified into a common framework. Our efforts solve the main problems of Cambridge capital controversy, and reasonably explain the equity premium puzzle. Strong empirical evidences support our results.

The Moderating Roles of Government in Poverty Reduction in Nigeria

This paper examined “The Moderating Roles of Government in Poverty Reduction in Nigerian” The paper critically evaluated the impact of government intervention in alleviating poverty in Nigeria.. It further addresses the issues of how these interventions programmes have proved to have been successful or have failed over time. The objective was to determine if there is statistically significant relationship between government expenditure on various poverty reduction programmes and economic growth in Nigeria. This we based our theoretical foundation on the Kuznet’s U Curve Hypothesis and the general income distribution theory to evaluate the link between inequality, poverty reduction and economic growth in Nigeria. In the methodology, our Model Specification was anchored on whether government programs has any significant influence on poverty reduction following the framework of Barro and Sala-i-Martin (1995) and Grootaert, Kanbbdur and Oh (1995) methods of analysis that uses a time subscript (t). We therefore modeled the relationship between poverty reduction and government programs through government expenditure on social intervention programs. The finding shows that there is no statistical significance between government expenditure and poverty reduction programs in Nigeria.

Causality and interdependence in econometric analysis and in economic theory

This is the Inaugural Address for the first established Chair of Econometrics in Italy at the Università Cattolica del Sacro Cuore of Milan (A.A. 1964–65). The author first focuses his attention on the contraposition between causal (recursive) and interdependent models in econometrics. The tools adopted to analyse the former category of models are much simpler than those necessary for the latter category, while the bulk of current econometric analysis is carried out by means of fully interdependent models. The author claims that this preference has its roots at a more fundamental level: the Neoclassical theoretical framework, which has been the dominant approach in economics. Its logic is best represented by the Walrasian general equilibrium model. As is well known, this model is explicitly characterized by the full interdependence of all the economic variables of the system. Yet, there are other approaches, like the Classical and the Keynesian ones, where some important relations are best represented by means of causal, rather than interdependent, relations. As an example, the author recalls the Ricardian theory of income distribution, where its recursive structure is crucial in showing the essential determinants of the distributive variables and, in particular, the residual nature of profits with respect to wages; or the Sraffa price system, where the rate of profit is determined before any other unknown and – as in Ricardo – independently of rents. The author concludes by outlining a distinction between two sets of economic relations: a first group of relations called “natural”, that are independent of the institutional setting of the economic system and are thus common to all production systems; and another group of relations, specific to the institutional context, which can differ from system to system, and can sometimes be fruitfully studied with the help other social sciences.

Which Way Forward: Marx's Theory or Sraffa's Theory? A Reply to Laibman

This article is a response to David Laibman's review essay, in this journal, on my recent book Money and Totality: A Macro-Monetary Interpretation of Marx's Logic in Capital and the End of the “Transformation Problem.” Laibman argues that Marx's theory is logically incoherent (the well-known “transformation problem”) and that Sraffa's theory is the only coherent theory of prices and income distribution, and therefore the “way forward” for critical economists is Sraffa's theory. I argue, to the contrary (in my book and in this article), that Marx's theory, correctly understood, is logically coherent (no transformation problem) and that Marx's theory has much greater explanatory power than Sraffa's theory, and therefore the “way forward” for critical economists continues to be Marx's theory.

The Mistakes of the Marginal Productivity Theory of Income Distribution

The debate that took place at the end of 19th and the beginning of 20th century on the neoclassical income distribution theory based on the marginal productivity of the production factors is well known. The debate evolved especially around the question whether the product is exactly exhausted through its distribution to the factors of production according to the value of their marginal products. This question is now considered resolved and closed by the proofs presented by Wicksell, Walras and later on by other distinguished economists (Chapman, Hicks etc). The purpose of this paper is to demonstrate that the proofs which were presented to support the product exhaustion theorem are mistaken and consequently the theory of income distribution on the basis of the marginal productivity of the production factors is wrong. Furthermore, this paper attempts to detect and explain the profounder reasons that presumably led to these mistakes, as well as to identify and propound the new relations that replace the wrong ones of the product exhaustion theorem. Last, it attempts to formulate the equilibrium of the whole economic system (demand, supply, production, factors of production etc) through a holistic-way equation system.

The Mistakes of the Marginal Productivity Theory of Income Distribution

The Mistakes of the Marginal Productivity Theory of Income Distribution

Sraffian Resolution of the Pasinetti Paradox

This paper investigates the Cambridge equation of growth and distribution from the standpoint of the theory of value. It is shown that the equation continues to hold good in a generalized form and its paradoxical aspect, viz., its invariance to workers’ consumption and saving behaviour stands eliminated. Results of this kind strengthen the possibility that Keynesian theory could provide stronger foundations for the theory of income distribution than marginal productivities of factors.

The Impacts of Rent Incomes on Capitalist Accumulation: Towards Coherence

Although there is no universally recognized definition in the existing literature, the ‘rentiers’ are usually identified as those subjects of an economic system that derive their income from any source different from wage and profit. Therefore, the rent is primarily described as a ‘passive income’ over a property for the use of which the owner can require payments without being directly involved in the entrepreneurial activity. From a contemporary perspective, these ‘properties’ may take the form of various assets such as equities, bonds, securities, monetary deposits and other financial instruments that generate an income from interest (or dividends). Belonging to different theories of income distribution, several authors have tried to integrate different shapes of this notion in their descriptions of the economic systems. Without neglecting a general discussion of the various paradigms to which the principal schools of thought refer to, in each section of this paper we will try to answer three main theoretical questions. First, what are the sources of rents and how are they explained? Second, who are the beneficiaries of this type of income and how they behave within the socioeconomic system? Thirdly, to what extent and in which ways various forms of rent affect the accumulation processes? The aim of this paper is to provide the analysis of the theoretical evolution from the ‘agricultural rent’ to a ‘monetary rent’, and finally to the description of a ‘financial rent’ in the current phase of capitalist development.

HETERODOX THEORIES OF ECONOMIC GROWTH AND INCOME DISTRIBUTION: A PARTIAL SURVEY

AbstractHeterodox theories of economic growth and income distribution are surveyed, focusing on major theories and recent contributions. First, a general framework for examining growth and distribution is discussed, in terms of which classical‐Marxian and post‐Keynesian–Kaleckian and other theories are presented. Since this framework examines how variables are determined in equilibrium, second, dynamics behind equilibria are examined, focusing on goods market and labor market changes. Third, the framework is extended in a variety of ways to examine additional models addressing productivity growth and technical change, money and inflation, finance and debt, additional distributional considerations, multisector issues, open economy questions, and the environment. It is concluded that the literature on heterodox theories of growth and distribution is vibrant, large, and growing, and addresses many issues that are ignored or neglected in orthodox theories, including power, unemployment, and aggregate demand.

Do Efficiency and Productivity Pay Off for Capital and Labor? A Note Using Data Envelopment Analysis

Data envelopment analysis (DEA) is a linear programming technique that can be used to evaluate or benchmark the performance of different businesses, non-profit organizations, public sector agencies, and even national economies. DEA can compare these or any set of entities called decision-making units (DMUs) according to how well they minimize inputs in order to maximize output(s), or, in other words, evaluate the DMUs according to how efficient they are. This article uses DEA to compare and contrast 15 Organization for Economic Co-operation and Development (OECD) nations according to how efficiently they attained their national output levels through capital and labor inputs minimization at the peak of the last business cycle in 2007. Next, these efficiency scores as well as other measures of the income shares or returns to labor and capital for each economy are used in order to see if there is some type of support for an aggregate, economy-wide productivity theory of distribution. Although different measures of productivity have been used at aggregate levels to one degree or another to predict payments to factor inputs in order to assess marginal and average productivity theory, the research done for this article has not found any other works that have used DEA, and so this article seeks to make a new and perhaps unique empirical contribution to the literature on aggregate productivity theories of labor and capital income distribution.

Znaczenie efektu Cantillona w teorii ekonomii

The Role of Cantillon Effect in EconomicsThe aim of this article is to examine the role of the Cantillon effect in economics. The literature of economic theory lacks the detailed discussion of the implications of the first-round effect for economics. This paper attempts to fill this gap. The article is mainly theoretical, but considerations presented are illustrated by relevant empirical data. Based on the analysis, the author concludes that the effect of Cantillon develops particularly the theory of money and inflation, the theory of banking and central banking, the theory of business cycle and price bubbles, the theory of income distribution and income and wealth inequalities, and the theory of public choice.

The Wage‐Share in an Open Economy. Discussing Mexico's Experience

ABSTRACTMexico's wage share in manufacturing has shown a downward trend. We discuss the main factors that have shaped this evolution during the period of 1994 to 2009 and we analyze this issue on the basis of Kalecki's theory of income distribution, but adapting to an open economy. We show that, changes in the degree of monopoly and in the composition of prime costs have had a great impact on income distribution. Further, trade opening has contributed to magnify the effect on manufacturing wage share of changes in the exchange rate.

Urbanization and Income Inequality in Post-Reform China: A Causal Analysis Based on Time Series Data.

This paper investigates the potential causal relationship(s) between China’s urbanization and income inequality since the start of the economic reform. Based on the economic theory of urbanization and income distribution, we analyze the annual time series of China’s urbanization rate and Gini index from 1978 to 2014. The results show that urbanization has an immediate alleviating effect on income inequality, as indicated by the negative relationship between the two time series at the same year (lag = 0). However, urbanization also seems to have a lagged aggravating effect on income inequality, as indicated by positive relationship between urbanization and the Gini index series at lag 1. Although the link between urbanization and income inequality is not surprising, the lagged aggravating effect of urbanization on the Gini index challenges the popular belief that urbanization in post-reform China generally helps reduce income inequality. At deeper levels, our results suggest an urgent need to focus on the social dimension of urbanization as China transitions to the next stage of modernization. Comprehensive social reforms must be prioritized to avoid a long-term economic dichotomy and permanent social segregation.

On Solvability of one Class of Nonlinear Integral-differential Equation with Hammerstein Non-compact Operator Arising in a Theory of Income Distribution

On Solvability of one Class of Nonlinear Integral-differential Equation with Hammerstein Non-compact Operator Arising in a Theory of Income Distribution

Economic theory and social classes

The marginalist economic theory believes that the effectiveness of the collective action exerted by a social class as a whole conflicts with the hypothesis of competition (perfect competition). A question of method is at the root of this view: the marginalist theory only takes into consideration the individual maximizing behaviour of workers, capitalists and entrepreneurs. In this way it excludes from the analysis the study of social links, which, as a matter of fact, are the conditions for collective action. In the classical approach, economic relations are instead affected by the institutions and social conventions that characterize each particular historical moment. As a consequence, the classical notion of competition (free competition) does not exclude a role for the social links that can justify collective action and, at the same time, make it effective. This characteristic of the classical approach is particularly considerable as concerns the theory of income distribution. A re-proposal of the classical theory of wages which takes into consideration the development and complexity of the institutions that, these days, condition the conflict for the distribution of income, cannot actually disregard the role of collective action.

Manajemen Zakat di Indonesia dan Brunei Darussalam

This book describes a comparative zakat management, especially going to explain about the government's fiscal policy part of Indonesia and Brunei Darussalam on development programs and poverty reduction with charity instruments in both countries. For the sake of economy, zakat distributed for the mustahik poverty alleviation. Even the results of this research will test the theory of income distribution in the form of direct cash assistance in the form of money, materials, or other objects that are consumptive, and compared with the economic aid in the form of zakat that is productive. In addition, this book has an important meaning to analyse the effectiveness of the management of zakat by the government through regulation and the establishment of zakat management institutions.

Real wages in the business cycle and the theory of income distribution: an unresolved conflict between theory and facts in mainstream macroeconomics

The focus of this article is the recurring tension between mainstream macroeconomics and observed facts in connection with the difficult task of providing explanations of the business cycle consistent both with the traditional theory of income distribution and with the empirical evidence concerning the co-movements of real wages and employment over the cycle. The attempts to reconcile facts and theory have led to the continuous introduction of specific and arguably ad hoc hypotheses, in contrast with the search for greater theoretical rigour claimed by the various streams of macroeconomic modelling subsequent to the neo-classical synthesis. In addition, the specific assumptions introduced in the models, or their implications, are in turn often contradicted or, at best, not confirmed by subsequent empirical research. It is suggested in the conclusions that the difficulty of keeping together in a simple and consistent framework theory and facts reflects the flawed theoretical foundations of mainstream theory.

Enriching the Theory of Factor Pricing and Income Distribution in Islamic Perspective

The paper aims to elaborate the theory of factor pricing and income distribution in Islamic perspective. We place Sadeqs thought as the benchmark and expand it. Using calculus differential, we construct factor pricing and income distribution under mudharabah scheme, which can describe the behavior of producer (mudhaarib) in making decision on business operation appropriately. The paper can prove mathematically that when Islamic principles are internalized, income distribution becomes more equal. This is expressed in parameters s, 1-s, and 1/1-s, as a share of profit goes to capital owner (shahibulmaal), entrepreneur (mudhaarib) and worker, respectively. The paper also proposes that wage level will be determined not only by perception or the mind set of capital owners and workers on the value of their assets, but also the standing moral of entrepreneurs and capital owners.

Josef Steindl, the Trieste School and the BNL Quarterly Review

The paper provides an introduction to the special issue in honour of Josef Steindl (1912-1993) celebrating the centennial anniversary of his birth. Steindl contributed to the theory of the firm, applying a stochastic methodology to study firms’ growth and their distribution by size; to the analysis of technology and education, stressing among other things the link between technical progress and skilled manpower requirements; to growth and business cycle theory, connecting the basic idea of a tendency to stagnation in a capitalist economy to Keynesian-Kaleckian macroeconomics and to a post-Keynesian theory of income distribution where investments determine profits; to the analysis of personal income distribution through the use of stochastic processes, with a critique of the traditional mainstream interpretation of the so-called Pareto Law. Behind all this, there was a general vision of the economy and society in which history, institutions and social tensions all played a central role. Relying on all this, there was a constant flow of applied analyses, always rich in intuition, aimed at understanding the real world so as to be able to better intervene in it in support of human progress. JEL Codes: B31, O40, E32, O33