Growth and Distribution: A Neoclassical Kaldor-Robinson Exercise

Kaldor’s capital/labor income distribution theory relied on differential saving propensities from profits and wages. Robinson’s growth models typically specified constant-coefficient technologies in which marginal productivities cannot determine distribution. Here these two insights are combined in a two-sector (capital goods, consumption goods) economy. Two technologies are available, but only as either-or alternatives. The choice of technology and the income distribution depend on the saving propensities. Steady-state consumption need not be greater when the economy is more capitalized and profit rates are lower