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Income Distribution, Employment Growth & the Kaldor-Verdoorn Growth Facts

Indian Journal of Industrial Relations

Volume 51 Issue 2

Published: 2015
Author(s) Name: Satya Prasad Padhi | Author(s) Affiliation: Professor, Department of Economics, Panjab University, Chandigarh, India
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Abstract

This paper advocates two different demand side explanations of the Verdoorn-Kaldor law that permits two different types of increasing returns with different employment implications. One is the realization of economies of scale that does not permit a strong relationship between employment growth and productivity growth. The other is the division of labor-led increasing returns as part of economic progress with robust induced employment growth for maintaining division of labor-led productivity growth in a cumulative manner. This paper shows that division of labor-led growth sticks to prices, in the face of productivity increases that translate into intermediate cost reduction, shapes the evolution of distribution of income that in turn shapes the employment productivity relationship.

Keywords: N.A.

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