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Cambridge Journal of Economics Advance Access originally published online on December 18, 2007
Cambridge Journal of Economics 2008 32(3):479-511; doi:10.1093/cje/bem047
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© The Author 2007. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved.

Distribution and growth reconsidered: empirical results for six OECD countries

Eckhard Hein* and Lena Vogel**

* Hans Böckler Foundation, Düsseldorf, Germany
** University of Kent For helpful comment on earlier versions we would like to thank Stefan Ederer, Camille Logeay, Engelbert Stockhammer, Till van Treeck, Achim Truger and Rudolf Zwiener. Helpful comments and suggestions by two anonymous referees are also gratefully acknowledged. Remaining errors are, of course, our own

Address for correspondence: PD Dr. Eckhard Hein, Macroeconomic Policy Institute (IMK) in the Hans Böckler Foundation, Hans Böckler Str. 39, 40476 Düsseldorf, Germany; email: eckhard-hein{at}boeckler.de

We analyse the relationship between functional income distribution and economic growth in Austria, France, Germany, the Netherlands, the UK and the USA from 1960 until 2005. The analysis is based on a demand-driven distribution and growth model for an open economy inspired by Bhaduri and Marglin, which allows for either profit- or wage-led growth. We find that growth in France, Germany, the UK and the USA has been wage-led, whereas Austria and the Netherlands have been profit-led. In the case of Austria a domestically wage-led economy changes to profit-led when including the effect of distribution on external trade. The Netherlands, however, are already profit-led without external trade. Our results so far only partially confirm Bhaduri and Marglin's theoretical conclusion that wage-led growth becomes less feasible when the effects of distribution on foreign trade are taken into account.

Key Words: Distribution • Growth • Demand-led accumulation regimes

JEL classifications: E12, E21, E22, E23, E25

Manuscript received February 12, 2007; final version received July 3, 2007.


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