Fiscal Regimes and Wage Formation: Learning Distributive Conflict in a Kaleckian Economy

boughabi, houssam (2026): Fiscal Regimes and Wage Formation: Learning Distributive Conflict in a Kaleckian Economy.

Abstract

This paper develops a Kaleckian model of wage dynamics in which wages are determined by forward-looking expectations, firms’ profitability, and institutional conditions shaped by fiscal policy. The model introduces nonlinear and regime-dependent effects through an institutional function that mediates the transmission of expectations and profits into wage outcomes. To empirically assess these mechanisms, we estimate a flexible reduced-form specification using machine learning methods, allowing for complex interactions and threshold effects that are not captured by standard linear approaches. The results provide evidence that institutional and fiscal regimes play a key role in shaping wage responses, supporting the view that income distribution is driven by distributive conflict and policy structures rather than market-clearing forces. These findings contribute to the post-Keynesian literature by offering a novel empirical framework for analyzing wage formation and highlight the importance of fiscal policy in influencing inequality and macroeconomic stability.

• Item Type: MPRA Paper
• Language: English
• Keywords: Wage dynamics, distributive conflict, post-Keynesian economics, machine learning econometrics, fiscal institutions.
• Subjects: C - Mathematical and Quantitative Methods > C4 - Econometric and Statistical Methods: Special Topics > C45 - Neural Networks and Related Topics; C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C53 - Forecasting and Prediction Methods ; Simulation Methods; E - Macroeconomics and Monetary Economics > E1 - General Aggregative Models > E12 - Keynes ; Keynesian ; Post-Keynesian; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E24 - Employment ; Unemployment ; Wages ; Intergenerational Income Distribution ; Aggregate Human Capital ; Aggregate Labor Productivity; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E60 - General

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