Investment-led growth, employment, and income distribution: Conceptualizing a post-Keynesian employment Phillips curve dynamics in India
DOI:
https://doi.org/10.13133/2037-3643/18992Keywords:
Young-Kaldor investment-led growth, employment and wages, income distribution, intermediate goods specializations, Phillips curve dynamicsAbstract
The present study aims at studying productivity growth, employment, and income distribution in a Young-Kaldor investment dynamics in which productivity growth and a higher markup sustaining investment are endogenous to growth and support better employment and wage outcomes. Investment-led growth requires equality of investment and profit. However, it also involves increases in wages as compensation for the increased incidence of specialized employment, which adds force to the investment-led dynamics. It is contended that empirical support for this investment-led transitional dynamics can point towards an employment Phillips curve: a positive correlation between wages and employment at given prices. A lack of dynamic evolution can indicate wage-price correlation, but without necessarily having spiral connotations, and provides alternative understandings to the price Phillips curve on which the literature focuses.
References
Ackley G. (1987), Macroeconomic: Theory and Policy, Canada: Collier Macmillan.
Behera H., Wahi G. e Kapur M. (2017), “Phillips Curve Relationship in India: Evidence from State-Level Analysis,” RBI Working Paper series (DEPR), no. 08/2017, Mumbai, India: Reserve Bank of India, Department of Economic and Policy Research. Available online.
Blecker R.A. (2016), “Wage-led versus Profit-led Demand Regimes: The Long and Short of it”, Review of Keynesian Economics, 4(4), pp. 373-390.
Blecker R.A. and Setterfield M. (2019), Heterodox Macroeconomics: Models of Demand, Distribution and Growth, Cheltenham (UK) and Northampton (MA, USA): Edward Elgar.
Blecker R.A. and Setterfield M. (2020), “On Multi-sector and Multi-technique Models, Production Functions and Goodwin Cycles: A Reply to Libman”, European Journal of Economics and Economic Policies: Intervention, 17(3), pp. 295-306.
Blitch C.P. (1983), “Allyn Young on Increasing Returns”, Journal of Post Keynesian Economics, 5(3), pp. 359-372.
CSO – Central Statistics Office, Economic Statistics Division (2018), Index of Industrial Production with Base 2011-2012: An Overview, New Delhi: Government of India, Ministry of Statistics and Programme Implementation. Available online.
Corsi M. and D’Ippoliti C. (2014), “The productivity of the public sector: A Classical view”, PSL Quarterly Review, 66(267), pp. 403-434.
Dua P. (2020), “Monetary policy framework in India”, Indian Economic Review, 55(1), pp. 117-154.
Gomes A.P (2020), “Regional economic growth in China from a Kaldorian perspective: A tale of two cities”, PSL Quarterly Review, 73 (295), pp. 283-312.
Hein E. (2023), “Inflation is always and everywhere … a conflict phenomenon: post-Keynesian inflation theory and energy price driven conflict inflation”, IPE Working Papers, no. 224/2023, Berlin: Berlin School of Economics and Law, Institute for International Political Economy (IPE). Available online.
Huang K.X.D., Liu Z. and Phaneuf L. (2004), “Why Does the Cyclical Behaviour of Real Wages Change Over Time”, American Economic Review, 94(4), pp. 836-856.
Kaldor N. (1961), “Capital Accumulation and Economic Growth”, in Lutz. F.A. (ed), The Theory of Capital (pp. 177-222), London: Palgrave Macmillan.
Kaldor N. (1972), “Irrelevance of Equilibrium Economics”, Economic Journal, 82(328), pp. 1237-1255.
Kaldor N. ([1983] 1989), “Keynesian Economics After Fifty Years”, Centenary Conference, Cambridge. Reprinted in Targetti F. and Thirlwall A.P. (eds.), The Essential Kaldor (pp. 164-198), London: Duckworth.
Kalecki M. (1965), The Theory of Economic Dynamics, London: George Allen & Unwin.
Keynes J M. (1936), The General Theory of Employment, Interest, and Money, London: Macmillan.
King J.E. (2013), “Wage Policy”, in Harcourt G.C. and Kriesler P. (eds.), The Oxford Handbook of Post-Keynesian Economics (vol. 1., pp. 510-522), Oxford: Oxford University Press.
Kundurthi R. and Kalluru S.R. (2025), “Inflation dynamics in India: A structural view”, PSL Quarterly Review, 77(311), pp. 469-491.
Landmann O. (2004), “Employment, Productivity and Output Growth”, ILO Employment Strategy Paper, no. 2004/17, Geneva: International Labour Organization, Employment Trends Unit, Employment Strategy Department.
Lavoie M. (2014), Post-Keynesian Economics. Cheltenham (UK) and Northampton (MA, USA): Edward Elgar.
Lavoie M. and Stockhammer E. (2012), “Wage-led growth: concepts, theories and policies,” ILO Working Papers 994709363402676, Geneva: International Labour Organization.
Mankiw N. (2016), Macroeconomics, , New York: Worth Publishers, A Macmillan Education Imprint.
Marglin S.A. (2021), Raising Keynes. A twenty-first-century general theory, Cambridge (MA): Harvard University Press.
Mishkin F., Sufi A. and Hooper P. (2019), The Phillips curve: Dead or alive, VoxEU Columns, 23 October. Available online.
Nagaraj R. (2013), “India’s Dream Run, 2003-08. Understanding the Boom and Its Aftermath”, Economic and Political Weekly, Special Articles, 48(20), pp. 39-51.
Onaran Ö. and Galanis G. (2012), “Is aggregate demand wage-led or profit-led? National and global effects”, Conditions of work and employment series, no.40, Geneva: International Labour Office. Available online.
Padhi S.P. (2014), “Assessing Manufacturing Growth in India: An Alternative View”, Indian Journal of Industrial Relations, 49(3), pp. 526-40.
Padhi S.P. (2019), “Technological versus Pecuniary External Economies: The Former Rule the Roost”, Journal of Economic Issues, 53(1), pp. 81-97.
Padhi S.P. (2024a) “Structural change and employment growth in India: reinterpreting ‘Manufacturing as an Engine of Growth’”, EconomiA (2025), 26(1), pp. 25-46. Available online.
Padhi S.P. (2024b), “The Lack of Lewis Turning Point in India: Conceptualizing the Roles of Capital Intensity, Employment Opportunities, and Keynesian Investments”, Global Journal of Emerging Market Economies, 17(2), pp. 222-243.
Patra M.D., Behera H. and John J. (2021), “Is the Phillips Curve in India Dead, Inert and Stirring to Life or Alive and Well?”, RBI Bulletin, 2021(Nov), pp. 63-75. Available online.
Romaniello D. and Stirati A. (2024), “Cost-Push and Conflict Inflation: A Discussion of the Italian Case,” Review of Political Economy, 36(4), pp. 1351-1380.
Roncaglia A. (2014), “The theory of employment: two approaches compared”, PSL Quarterly Review, 67(270), pp. 241-268. Available online.
Rowthorn R. (1981), “Demand, Real Wages and Economic Growth”, Thames Papers in Political Economy, no. 81/3 (Autumn), London: Thames Polytechnic and Northeast London Polytechnic.
Sandilands R.J. (1990), “Nicholas Kaldor’s Notes on Allyn Young’s LSE Lectures 1927-29”, Journal of Economic Studies, 17(3/4), pp. 2-170.
Schmookler J. (1966), Invention and Economic Growth, Cambridge (MA): Harvard University Press.
Skott P. (2023), “Phillips curves, behavioral economics and post-Keynesian macroeconomics”, Economics Department Working Paper Series, no. 2023-4, Amherst (MA): University of Massachusetts Amherst. Available online.
Stigler G.J. (1951), “The Division of Labor is Limited by the Extent of the Market”, Journal of Political Economy, 59(3), pp. 185-185.
Sylos Labini P. (1956), Oligopolio e progresso tecnico, Milano: Giuffrè; new edition (1964), Torino: Einaudi; English translation (1962), Oligopoly and Technical Progress, Cambridge (MA): Harvard University Press.
Sylos Labini P. (1979), “Prices and Income Distribution in Manufacturing Industry”, Journal of Post Keynesian Economics, 2(1), pp. 3-25.
Sylos Labini P. (1984), Le forze dello sviluppo e del declino, Roma-Bari: Laterza; English translation (1985), The Forces of Growth and Decline, Cambridge (MA): MIT Press.
Sylos Labini P. (1995), “Why the Interpretation of the Cobb Douglas Production Function Must Be Radically Changed”, Structural Change and Economic Dynamics, 6(3), pp. 485-504.
Young A. (1928), “Increasing Returns and Economic Progress”, Economic Journal, 38(152), pp. 527-542.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2025 Satya Prasad Padhi
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
