Open Access. Powered by Scholars. Published by Universities.®
Articles 1 - 1 of 1
Full-Text Articles in Political Economy
The Macroeconomics Of The Declining U.S. Labor Share: A Debt-Led Explanation, Alex Jianan Xu
The Macroeconomics Of The Declining U.S. Labor Share: A Debt-Led Explanation, Alex Jianan Xu
Senior Projects Spring 2015
This paper aims to answer two major conundrums in macroeconomic theory with regards to the U.S. economy. First, standard macroeconomic models such as Harrod-Domar and Solow theoryze that factor shares are constant; however, actual measures of the U.S. labor share have been on a downward trend since the early 1980s. The second conundrum relates to the Post-Kaleckian wage-led or profit-led view of economic growth. It indicates that a fall in the labor share in a wage-led economy will result in a fall in aggregate demand (due to deceases in consumption), and an increase in aggregate demand in a profit-led economy …