Abstract

This paper reviews linkages between factor-income distribution and macroeconomic phenomena in various strands of theoretical literature, and briefly evaluates their relevance for recent Italian developments. Under the classical assumption of different saving behavior on the part of individuals belonging to socio-economic classes earning wages, profits, and rents, factor-income distribution has obvious and immediate implications for personal income distribution and macroeconomic accumulation. Optimizing approaches to savings have similar implications in balanced-growth, infinite-horizon economies, where no savings are performed out of income streams that grow at the same rate as desired consumption; in over-lapping generations economies, conversely, savings are likely to decline if more resources are distributed to the (relatively old) owners of the economy's capital stock. Simple empirical evidence indicates that the dynamics of earned income and intergenerational distributional phenomena are indeed relevent to Italy's savings trends.