Income Distribution, Employment Growth & the Kaldor-Verdoorn Growth Facts

This paper advocates two different demand side explanations of the Verdoorn-Kaldor law that permits two different types of increasing returns with different employment implications. One is the realization of economies of scale that does not permit a strong relationship between employment growth and productivity growth. The other is the division of labor-led increasing returns as part of economic progress with robust induced employment growth for maintaining division of labor-led productivity growth in a cumulative manner.