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ABSTRACT This contribution to the Forum Debate on global development focuses on the dimension of functional income distribution between labour and capital and its demand‐side and supply‐side effects. The article summarizes recent literature that has sought to explain the reasons behind the global fall in the labour share. It then discusses the demand‐side effects of the declining wage share on growth, based on the post‐Keynesian/post‐Kaleckian literature. The author presents an alternative policy scenario for the G20 based on a mix of increasing wage share and public investment, before discussing the supply‐side effects of rising inequality. The article concludes with some policy implications for equality‐led development.
Özlem Onaran (2019) studied this question.
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