Ekonomia i Prawo. Economics and Law
Wage inequality and macroeconomic stability: a synergetic approach
DOI: http://dx.doi.org/10.12775/EiP.2018.019
Abstract
Motivation: The article is dedicated to the relationship between a level of wage inequality and such an aspect of macroeconomic instability as unemployment. Inequality is connected with structure variety of a relevant economic system. As variety is an important object of complexity study, it makes sense to consider the relationship between wage inequality and macroeconomic stability in the light of the synergetic and evolutionary theories, which are directly dealing with phenomena of systems complexity, order and stability.
Aim: To present a dispersion (probabilistic) approach in using neoclassical demand and supply curves analysis and, thus, to propose a new definition of the equilibrium problem, which is closer to evolutionary paradigm; with help of the D–S curves, to prove the connection between degree of wage inequality and the general level of unemployment; to demonstrate two types of extreme macroeconomic instability in their relation with the character of wage inequality, and to regard them from the standpoint of the synergetic conception.
Results: Both situations — very low and very high wage inequality — are related with extreme macroeconomic instability. The first situation can be related not only with general poverty and homogenous, low skilled workforce, but, primarily, with absence of evolutionary change. A very high wage inequality can be related with inflexible labour markets, low level of social mobility and weak social cohesion. These two situations are comparable with two types of disorder in synergetic conception. With help of the AD–AS curves, the action of macroeconomic synergistic effect is demonstrated; this effect is accompanied by economic growth, decreasing unemployment and the wage levelling. The approach applied in the article confirms some basic propositions of modern macroeconomics and can be used for diminishing the theoretical gap between such opposing interpretations of unemployment as neoclassical and Keynesian.
Keywords
Full Text:
PDFReferences
Acemoglu, D., & Autor, D. (2012). What does human capital do? A review of Goldin and Katz’sthe race between education and technology. Journal of Economic Literature, 50(2). doi:10.1257/jel.50.2.426.
Andersen, E.S., & Holm, J.R. (2014). The signs of change in economic evolu-tion. Journal of Evolutionary Economics, 24(2). doi:10.1007/s00191-014-0350-z.
Autor, D.H., Katz, L.F., & Krueger, A.B. (1998). Computing inequality: have computers changed the labor market? Quarterly Journal of Economics, 113(4). doi:10.1162/003355398555874.
Bayew, M.R., Morgan, J., & Scholten, P. (2004). Price dispersion in the small and in the large: evidence from an internet price comparison site. Journal of Industrial Economics, 52(4).
Bertelsmann Stiftung. (2017). Social cohesion radar project. Retrieved 27.03.2017 from https://www.bertelsmann-stiftung.de.
Blanchflower, D.G., Oswald, A.J., & Sanfey, P. (1996). Wages, profits and rent-sharing. Quarterly Journal of Economics, 111 (1). doi:10.2307/2946663.
Checchi, D., & Garcia-Penalosa, C. (2008). Labor market institutions and income inequality. Economic Policy, 56. doi:10.1002/9781444307238.ch1.
Damiani, M., Hölscher, J., & Pompei, F. (2011). Labour market inequalities and the role of institutions. European Journal of Comparative Economics, 8(2).
Horodecka, A. (2017). The methodology of evolutionary and neoclassical eco-nomics as a consequence of the changes in the concept of human nature. Argumenta Oeconomica, 39(2). doi:10.15611/aoe.2017.2.06.
Institute for Policy Studies. (2016). Income inequality. Retrieved 27.03.2017 from http://inequality.org.
Katz, L.F., & Murphy, K.M. (1992). Changes in relative wages, 1963–1987: supply and demand factors. Quarterly Journal of Economics, 107(1). doi:10.2307/2118323.
Komlos, J. (2015). What every economics student needs to know and doesn’t get in the usual principles. New York: Routledge. doi:10.4324/9781315698236.
Krueger, A.B., & Lindahl, M. (2001). Education for growth: why and for whom? Journal of Economic Literature, 39 (4). doi:10.1257/jel.39.4.1101.
Krugman, P. (2014a). Why we’re in a new gilded age. Retrieved 27.03.2017 from http://www.nybooks.com.
Krugman, P. (2014b). The populist imperative. Retrieved 27.03.2017 from https://www.nytimes.com.
Nelson, R.R., & Winter, S.G. (1982). An evolutionary theory of economic change. Cambridge–Massachusetts–London: The Belknap Press of Harvard Uni-versity Press.
Nicolis, G., & Prigogine, I. (1989). Exploring complexity: an introduction. New York: W.H. Freeman.
Piketty, T. (2014). Capital in the twenty-first century. Cambridge–Massachusetts–London: The Belknap Press of Harvard University Press.
Rodbertus, K. (1898 (1850)). Overproduction and crises. London: Swan Sonnen-schein & Co.
Schmitt, J., Shierholz, H., & Mishel, L. (2013). Don’t blame the robots. Re-trieved 27.03.2017 from http://www.epi.org.
Sorokin, P. (1947). Society, culture, and personality: their structure and dynamics. New York–London: Harper & Brothers Publishers.
Tugan-Baranovsky, M. (2004). Industrial crises. Kiev: Naukova Dumka.
van Treeck, T. (2013). Did inequality cause the U.S. financial crisis? Journal of Economic Surveys, 28(3). doi:10.1111/joes.12028.
Vozna, L. (2016). The notion of entropy in economic analysis: the classical examples and new perspectives. Journal of Heterodox Economics, 3(1). doi:10.1515/jheec-2016-0001.
Voznaya, L. (2005). Temporal physics in financial catastrophes forecast. Vo-prosy Economiki, 8.
ISSN 1898-2255 (print)
ISSN 2392-1625 (online)