Investment-led Growth, Employment, and Income Distribution: Conceptualizing a Post-Keynesian Employment Phillips Curve Dynamics in India

The present study aims at studying productivity growth, employment, and income distribution in a Young-Kaldor investment dynamics in which productivity growth and a higher markup sustaining investment are endogenous to growth and support better employment and wage outcomes. Investment-led growth requires equality of investment and profit. However, it also involves increases in wages as compensation for the increased incidence of specialized employment, which adds force to the investment-led dynamics. It is contended that empirical support for this investment-led transitional dynamics can point towards an employment Phillips curve: a positive correlation between wages and employment at given prices. A lack of dynamic evolution can indicate wage-price correlation, but without necessarily having spiral connotations, and provides alternative understandings to the price Phillips curve on which the literature focuses.