Bargaining power, effective demand and technical progress: a Kaleckian model of growth

Following the Kaleckian tradition, this paper presents a demand‐led growth model in which the distribution of income is fully endogenised. This is done by introducing claims on income by workers and firms. The bargaining power of these two groups affects, through distribution, the patterns of accumulation and inflation. In turn, the bargaining power of workers is affected by the rate of change of employment. The paper discusses the model's static and dynamic implications, including the effects of exogenous and induced technical progress. The model confirms all the typical Kaleckian results, including the fact that increases in real wages may lead to accelerating accumulation as well as inflation. It also produces a new result: it is possible that an increase in the rate of change of labour productivity may not lead to an increase in the rate of change of employment.