Structural transformations and cumulative causation towards an evolutionary micro-foundation of the Kaldorian growth model
André Lorentz, Tommaso Ciarli, Maria Savona & Marco Valente
#2022-001
We derive the Kaldorian cumulative causation mechanism as an emergent
property of the dynamics generated by a micro-founded model. We build on
an evolutionary growth model which formalises the endogenous relations
between structural changes in the production, organisation and
functional composition of employment and of consumption patterns
(originally proposed by Ciarli et al, 2010). We discuss the main
transition dynamics to a self- sustained growth regime in a two-stage
growth pattern generated through the numerical simulations of the model.
We then show that these mechanisms lead to the emergence of a
Kaldor-Verdoorn law. Finally we show that the structure of demand shapes
the type of growth regime emerging from the endogenous structural
changes, fostering or hampering the emergence of the Kaldor Verdoorn
law. This depends on the endogenous income distribution and
heterogeneity in consumption behaviour.
Keywords: Structural change, economic growth, final consumption,
technological change, cumulative causation, evolutionary economics,
Kaldor-Verdoorn Law
JEL Classification: O41, L16, C63, E11, O14