The Paradox of Technological Progress, Growth, Distribution, and Employment in a Demand-led Framework

This study builds a Kaleckian model that incorporates endogenous technological progress and investigates how a change in a parameter that directly fosters technological progress affects growth and distribution. In this model, there is an optimal wage share that maximizes the technological progress rate. Accordingly, if the actual wage share can be moved to an optimal level, the economic growth rate will increase. This analysis reveals that a policy that directly promotes technological progress consequently decreases the long-run equilibrium value of the wage share, the capacity utilization rate, the employment rate, and the economic growth rate.