Growth and income distribution with the dynamics of power in labour and goods markets

The interaction between economic growth and income distribution is examined using Kaleckian/post-Keynesian models in which there are lags in investment and in which the dynamics of income distribution between wages and profits depends on changes in power relations in both the labour market and goods market. By examining these two influences on distributional dynamics simultaneously, the relative strength of which can change over the growth process, it is shown that the growth-distributional dynamics can involve non-linearities, multiple equilibria and instability. The implications of policy-induced changes—including those in macroeconomic policy and labour market and antitrust policies—on aggregate demand and distribution are examined for both wage-led and profit-led growth regimes.