Reconsidering the Dynamic Interaction between Real Wages and Macroeconomic Activity

In this paper we investigate the role and the feedback structure of income distribution in the macro-dynamics of the U.S. economy after World War II. Among other things we analyze both theoretically and empirically the influence of job insiders on wage determination. Furthermore, by means of system GMM estimation we find empirical evidence of a negative dependence of the goods market dynamics on the development of functional income distribution in the U.S. economy.