Wage-led Regime, Profit-led Regime and Cycles: a Model(French title for the publication: Régime wage-led, régime profit-led et cycles : un modèle)

We propose a dynamic model which deals with the impact of income distribution variations on growth. In that goal, we use two models : the classical Goodwin model (1967) and the Bhaduri-Marglin model (1990), which also focuses on the links between income distribution and growth, but in a Keynesian frame. We introduce Keynesian demand constraints within the Goodwin model and modify its investment function, which becomes non-linear. With these new hypotheses, we show that Goodwin cycles may either be maintained or disappear. If most trajectories oscillate around a classical equilibrium, the economy may also fall during a cycle into a Keynesian unemployment state. In that case, cycle dynamic is broken because wages are squeezed whereas the economy is in a wage-led regime. This model allows to capture some specific characteristics of the French economic situation that took place in the 1980s-1990s.