The purpose of this paper is to incorporate free entry into the Kaleckian model. To this end, we consider a model with monopolistic competition, mark-up pricing and a free-entry condition. Using this model, the Kaleckian model is unstable under a wage-led growth regime, and it is stable under a profit-led growth regime, when the interest rate is supposed to be constant. Stability under a wage-led growth can be achieved if the interest rate is allowed to respond positively to capacity utilization. We also find that a goods market policy, but not an income distribution policy, is then effective from an economic growth perspective.

The purpose of this paper is to understand the behaviour of the capital share and the unemployment rate in Europe over the past quarter of a century. We consider a model with monopolistic competition, increasing returns and an imperfect labour market, assuming that the elasticity between capital and labour is less than unity. Previous works have generally assumed constant returns to scale. Our results offer an important conclusion, namely that increased wage pressure will increase the unemployment rate and the capital share even though the latter initially decreases, which fits the stylized facts about the studied economies. Copyright Verein für Socialpolitik and Blackwell Publishing Ltd. 2006.

This paper analyses the relationship between the real wage rate and employment when we induce capital-labour substitution within a Post-Keynesian Kaleckian model. To avoid the over-determinacy problem, we consider a non-homogeneous production function and cost minimization, in contrast to recent work that assumed a homogeneous production function and profit maximization. As a result, we find not only that increasing returns to scale are important in sustaining the long-run stability condition, but also that if the increasing returns to scale are small, then it is more likely that employment will increase.me ca_354 525..536