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The Relationship among Factor Intensities, Wage-led Economic Growth and Income Inequality in the Iranian economy
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Habibi Roghaye   , Mehdi Hajamini * , Kazem Yavari |
| Yazd University |
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Abstract: (1944 Views) |
| Economic growth is an important objective of economic policymaking. Its benefits, however, do not proportionately reach low-income deciles of population that depend on labor income. Using time series data for the 1964-2016 period, this paper investigates wage-ledness of supply side of the Iranian economy. Empirical findings indicate that per capita growth of labor force compensation has a significant positive effect on economic growth. In addition, causality tests confirm that if production becomes more labor-intensive (increase in labor share), then the benefits of economic growth directly go to the pocket of lower-income deciles and the Gini coefficient declines. Therefore, wage-led sustainable growth strategy is a desirable strategy for the dual purpose of increasing growth and poverty alleviation. For this purpose, a structure of production that relies on relative labor abundance and labor-intensive sectors with comparative advantage will help foreign sector of the economy become a wage-led sector, inducing a cycle of wage-led demand and wage-led supply in the economy. |
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| Keywords: Economic Growth, Wage-ledness, Profit-ledness, Income Inequalily |
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Full-Text [PDF 1266 kb]
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Type of Study: Research |
Subject:
Special
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