FUNCTIONAL INCOME DISTRIBUTION AND GROWTH IN SOUTH KOREA: A POST KEYNESIAN ECONOMETRIC ANALYSIS

Özet

The aim of this article is to analyze the short-term impact of functional income distribution on aggregatedemand and its components in South Korea within a post Keynesian framework, in which demandregime of an economy is either wage or profit-led. The article firstly portrays the structural change andthe macroeconomic performance of South Korea, and then presents the evolution of the labor incomeshare in the country. The article follows with the presentation of the theoretical model employed for theanalysis of the demand regime in the country and offers a survey of the empirical literature of the postKeynesian models of income distribution and growth. Then takes place the econometric analysis and thearticle proceeds with the evaluation of the results and concludes. The econometric investigation shows that,over the period 1970–2011, the growth regime of the domestic economy is wage-led, while that of the totaleconomy is profit-led. The results are partially in contradiction with those already found in the literatureand point that pro-labor growth policies are not viable within the current structure of the South Koreaneconomy in the short run.