IESET.
Hypotheses·distribution·wage_led_vs_profit_led_growth_oecd

Following Bhaduri-Marglin (1990) and the Stockhammer-Onaran post-Keynesian empirical tradition, advanced economies are heterogeneously classified as "wage-led" or "profit-led" depending on whether a rise in the wage share raises or lowers aggregate demand.

The hypothesis tests, in an OECD post-1980 panel, whether the cross-country distribution of estimated demand-regime classifications is a mix rather than uniformly profit-led, with at least one-third of countries supporting a wage-led classification (positive consumption response to wage-share rise that exceeds the negative investment-and-net-export response). A market- liberal reading would predict that all economies are profit-led under open-economy / capital-mobility conditions; the post-Keynesian reading predicts substantial heterogeneity, with large closed economies (US, EU as bloc, Japan) more wage-led and small open economies (Netherlands, Sweden, Korea) more profit-led.

PARTIALengine/runs/wage_led_vs_profit_led_growth_oecd

PARTIAL — coef=+3.724e-09, p=0.38 (above α=0.1); direction inconclusive

confidence cueThe result is useful, but not decisive. Treat it as a clue, not a settled conclusion.

policy briefMixed or noisy

In ordinary language

Do children have a better shot at moving up when schools, housing, and neighborhoods give them access to opportunity, rather than simply because a country redistributes more income?

plain answer

The evidence is suggestive but not decisive. coef=+3.724e-09, p=0.38 (above α=0.1); direction inconclusive

why it matters

Distributional claims often sound morally clear but are empirically complex. This test asks whether the proposed channel explains real differences across places.

how the test works

It compares 17 country or place units from 1980 to 2020, using a panel fe design, with fixed effects for country and year.

what was measured
What changed
  • Labour share gross value added
What we checked
  • Aggregate demand growth
  • Private consumption share income
  • Gross fixed capital formation share income
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

No evidence packet has been generated yet.

Results

engine/runs/wage_led_vs_profit_led_growth_oecd
1007550250198020002020USAGBRFRADEUITAESPNLD
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show aggregate_demand_growth across 17 sampled countries over 1980–2020.
The shapes above are stylised — none of the lines are real data.
Placeholder for wage_led_vs_profit_led_growth_oecd. Published chart will be generated from engine/runs/wage_led_vs_profit_led_growth_oecd/chart_data.json.

Who has skin in the game — schools predicting on this

8 schools list this hypothesis as a test of their position. The chips below are school-level scoreboard outcomes, not a second hypothesis verdict.

hypothesis verdict vs scoreboard outcome

The banner verdict judges this hypothesis as written. The scoreboard asks whether each school's polarity-corrected prediction was right. Raw status is not a school win: SUPPORTED supports schools that needed SUPPORTED, but refutes schools that needed REFUTED.

Degrowth / Ecological Macroeconomicswins if SUPPORTEDpartial/no-callDemocratic Socialism (Bernsteinian revisionism + modern)wins if SUPPORTEDpartial/no-callEco-Socialism / Red-Greenwins if SUPPORTEDpartial/no-callMarket Socialism (Lange-Lerner tradition)wins if SUPPORTEDpartial/no-callMarxian Political Economywins if SUPPORTEDpartial/no-callMarxism-Leninism (central-planning implementation)wins if SUPPORTEDpartial/no-callModern Monetary Theorywins if SUPPORTEDpartial/no-callPost-Keynesianwins if SUPPORTEDpartial/no-call

Pre-registration

registration ordering unverified
first-spec commit 4c8ce8e · 2026-07-18T22:11:21Z
run generated · 2026-06-29T17:52:01Z
Run timestamp predates this path's first git-add commit (rebase, rename, or pre-git local run). Spec hash is still the path's first-add commit — not repository HEAD — but ordering is not a clean pre-registration proof.

Following Bhaduri-Marglin (1990) and the Stockhammer-Onaran post-Keynesian empirical tradition, advanced economies are heterogeneously classified as "wage-led" or "profit-led" depending on whether a rise in the wage share raises or lowers aggregate demand. The hypothesis tests, in an OECD post-1980 panel, whether the cross-country distribution of estimated demand-regime classifications is a mix rather than uniformly profit-led, with at least one-third of countries supporting a wage-led classification (positive consumption response to wage-share rise that exceeds the negative investment-and-net-export response). A market- liberal reading would predict that all economies are profit-led under open-economy / capital-mobility conditions; the post-Keynesian reading predicts substantial heterogeneity, with large closed economies (US, EU as bloc, Japan) more wage-led and small open economies (Netherlands, Sweden, Korea) more profit-led.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

Not supported if (a) the cross-country distribution of demand-regime classifications is uniformly profit-led (sum-of-component- coefficients on labour-share is negative for all countries at p < 0.10), OR (b) the wage-led classification is supported in fewer than one-third of sample countries (i.e. heterogeneity is too thin to ground a meaningfully heterogeneous regime), OR (c) the country classifications are unstable across the 1980-2000 vs 2000-2020 sub-samples (i.e. the regime is contingent on the sample period rather than a stable structural feature).

formal test & threshold
test:      country_specific_sum_of_demand_component_labour_share_coefficients
threshold: sum-of-component-coefficients > 0 in >= 33% of sample countries AND classification is stable across two halves of the sample period AND average panel-FE coefficient is statistically distinct from zero

Method

Template
panel_fe
Fixed effects
country, year
Clustering
country
Sample
17 countries · 1980 – 2020
Evidence type
associational

Country-by-country single-equation regressions (a la Stockhammer-Onaran) of consumption, investment, and net-exports on labour-share, with standard controls. The country-level wage-led-vs-profit-led classification is the SIGN of the sum-of-component-coefficients on the labour-share variable. Aggregate panel-FE specification reports the average effect; the heterogeneity test counts the fraction of countries where the country-specific sum is positive (wage-led).

Data

VariableSourceTransform
aggregate_demand_growth
outcome
world_bank_wdi:NY.GDP.MKTP.KD.ZGtier 2
yoy
private_consumption_share_gdp
outcome
world_bank_wdi:NE.CON.PRVT.ZStier 2
level
gross_fixed_capital_formation_share_gdp
outcome
world_bank_wdi:NE.GDI.FTOT.ZStier 2
level
net_exports_share_gdp
outcome
world_bank_wdi:NE.RSB.GNFS.ZStier 2
level
labour_share_gross_value_added
treatment
oecd:OECD.SDD.NADtier 2
level
real_gdp_per_capita
control
world_bank_wdi:NY.GDP.PCAP.KDtier 2
log
trade_openness
control
world_bank_wdi:NE.TRD.GNFS.ZStier 2
level
short_term_interest_rate
control
oecd:OECD.SDD.STEStier 2
level
real_effective_exchange_rate
control
bis:WS_EERtier 2
level
log_population
control
world_bank_wdi:SP.POP.TOTLtier 2
log

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — wage_led_vs_profit_led_growth_oecd

Verdict: PARTIAL — coef=+3.724e-09, p=0.38 (above α=0.1); direction inconclusive

Pre-registration

  • Claim: Following Bhaduri-Marglin (1990) and the Stockhammer-Onaran post-Keynesian empirical tradition, advanced economies are heterogeneously classified as "wage-led" or "profit-led" depending on whether a rise in the wage share raises or lowers aggregate demand. The hypothesis tests, in an OECD post-1980 panel, whether the cross-country distribution of estimated demand-regime classifications is a mix rather than uniformly profit-led, with at least one-third of countries supporting a wage-led classification (positive consumption response to wage-share rise that exceeds the negative investment-and-net-export response). A market- liberal reading would predict that all economies are profit-led under open-economy / capital-mobility conditions; the post-Keynesian reading predicts substantial heterogeneity, with large closed economies (US, EU as bloc, Japan) more wage-led and small open economies (Netherlands, Sweden, Korea) more profit-led.
  • Falsification rule: Not supported if (a) the cross-country distribution of demand-regime classifications is uniformly profit-led (sum-of-component- coefficients on labour-share is negative for all countries at p < 0.10), OR (b) the wage-led classification is supported in fewer than one-third of sample countries (i.e. heterogeneity is too thin to ground a meaningfully heterogeneous regime), OR (c) the country classifications are unstable across the 1980-2000 vs 2000-2020 sub-samples (i.e. the regime is contingent on the sample period rather than a stable structural feature).
  • Falsification test: country_specific_sum_of_demand_component_labour_share_coefficients

Estimate

  • Method: linearmodels.PanelOLS
  • Coefficient (treatment): +3.724e-09
  • Std error: 4.234e-09
  • p-value: 0.38
  • Observations: 282, countries: 13
  • Within R²: 0.00116
  • Fixed effects: entity=True, time=True
  • Clustering: country

Variables resolved

  • world_bank_wdi:NY.GDP.MKTP.KD.ZG → aggregate_demand_growth (outcome, publisher=world_bank_wdi, n=13897)
  • world_bank_wdi:NE.CON.PRVT.ZS → private_consumption_share_gdp (outcome, publisher=world_bank_wdi, n=10515)
  • world_bank_wdi:NE.GDI.FTOT.ZS → gross_fixed_capital_formation_share_gdp (outcome, publisher=world_bank_wdi, n=9870)
  • world_bank_wdi:NE.RSB.GNFS.ZS → net_exports_share_gdp (outcome, publisher=world_bank_wdi, n=10853)
  • oecd:OECD.SDD.NAD,DSD_NAMAIN1@DF_TABLE1,1.0 → labour_share_gross_value_added (treatment, publisher=oecd, n=3157)
  • world_bank_wdi:NY.GDP.PCAP.KD → real_gdp_per_capita (controls, publisher=world_bank_wdi, n=12104)
  • world_bank_wdi:NE.TRD.GNFS.ZS → trade_openness (controls, publisher=world_bank_wdi, n=10714)
  • bis:WS_EER → real_effective_exchange_rate (controls, publisher=bis, n=2112)
  • world_bank_wdi:SP.POP.TOTL → log_population (controls, publisher=world_bank_wdi, n=14447)

Variables missing data

  • oecd:OECD.SDD.STES,DSD_KEI@DF_KEI,4.0 (controls, name=short_term_interest_rate) — vintage not on disk

Generated by scripts/run_panel_fe.py at 2026-06-29T17:52:01+00:00

Strongest opposing argument

Every hypothesis ships with its charitable opposing argument. The framework earns credibility by handling objections at their strongest, not weakest.

Notes

Candidate, not pre_registered. On promotion, confirm OECD ANA labour- share dataflow URN, document the country-by-country estimation protocol (lag structure, sample-stability tests), and pre-register the country list and the heterogeneity threshold in advance of the run.

Authored framework. Read the transparency note.