Employment rate, working time and income distribution. The conditions under which the benefits of increases in hourly labour productivity are directed to employment growth
DOI:
https://doi.org/10.13133/2037-3651/18597Keywords:
Employment working hours, hourly labour productivity, effective demand, growth, income distributionAbstract
The aim of this essay is to show how sustained growth in the employment rate, which should be taken as a strategic variable of economic policy, depends – for given growth rates of output and working age population - on two conditions: (a) allowing working hours to decline at the same rate at which hourly labour productivity grows; (b) allowing real hourly wages to increase at the rate at which hourly labour productivity increases. The essay highlights that the two conditions stated and analytically examined are to be considered as necessary conditions for an expansion of demand and output to express the highest potential for employment growth at unchanging distributive shares. Once both are satisfied, the benefits of the increase in hourly labour productivity are transferred to wages in the form of a higher employment growth rate. The analytical framework developed in the essay is used for an initial assessment of the empirical evidence.
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