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The Very Political Economy of Functional Distribution in Developing Countries

Paper Session

Sunday, Jan. 9, 2022 12:15 PM - 2:15 PM (EST)

Hosted By: Union for Radical Political Economics
  • Chair: Ibrahim Shikaki, Trinity College

The Political Economy of the Wage Share in Palestine: Military Occupation and Class Struggle

Ibrahim Shikaki
,
Trinity College

Abstract

The paper constructs the first-ever wage share for the Palestinian economy (1970-2020). It studies the economic impact of the Israeli occupation on distribution within the Palestinian economy. Models that consider the economic impact of the Israeli occupation assume such impact is borne by Palestinians capitalists, impacting their profitability. This paper empirically explores an alternative argument: rather than passively carrying the burden, Palestinian capitalists channel the economic impact to Palestinian workers via the nominal wage, affecting the overall wage share.
The paper also highlights the role of two key political/institutional developments in functional distribution. First, the establishment of the Palestinian Authority in 1993 and the accompanying class transformation that followed. And second, the wave of neoliberal policies that followed the tenure of then Prime Minister Salam Fayyad in 2006.

Post-Apartheid South Africa: A Functional Distribution Lens

Adam Aboobaker
,
University of Massachusetts-Amherst

Abstract

For much of the period prior to the Great Recession, post-apartheid South Africa’s macroeconomy was characterized by a declining wage-share. From a political-economy perspective, this ought to be something of a puzzle. The apartheid regime gained striking notoriety for its hostile stance to the majority of the country’s workers and the democratic era has ushered in a dispensation whereby the Congress of South African Trade Unions (COSATU) has been an important political actor in a dominant tripartite alliance including the South African Communist Party (SACP) and the ruling African National Congress. This paper investigates whether booming commodity prices, rather than decaying bargaining institutions, explain the decline in the wage share for an important period (2000-2008) of South Africa’s democratic era.

Decomposing Inequality: The Dynamics of the Decline in Income Inequality in Bolivia

Raul Zelada-Aprili
,
Trinity College

Abstract

Bolivia achieved a significant decline in inequality between 2005 and 2018 while at the same time achieving among the highest and longest sustained growth rates of GDP in its recent history. As it has been discussed in the literature, the reduction in inequality in Bolivia is mainly explained by the increase in labor income at the lower end of the income distribution. This paper attempts to further understand the distributional dynamics of the Bolivian recent growth episode by applying different decomposition techniques to uncover the drivers of the change in inequality between inter-group and intra-group components. Moreover, it explains the decline in inequality by analyzing the policy framework in place during this period.

Functional Distribution of Income and the Growth Regime in Peru

César Castillo Garcia
,
New School for Social Research

Abstract

This paper reconstructs and analyses statistics on the shares of wages, income from self-employment (or from mixed sources) and profits in Peru’s GDP since 1942, and then compares these shares with the averages for Latin America and other economies. The paper sheds light on the political and institutional developments in Peru, and the role they have played in influencing the wage share trends in the last seven decades. Finally, the study then makes a comparative analysis of trends in the wage share and rate of growth, and it estimates a simultaneous equations model using three-stage least squares (3SLS) and generalized method of moments (GMM) to determine the growth regime. The conclusion is that growth is wage-led, so distributional policies to increase this component would likely boost the level of economic activity
JEL Classifications
  • E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy
  • O1 - Economic Development