Research Article

A WAGE-LED OR PROFIT-LED DEMAND REGIME: THE CASE OF JORDAN (1990 – 2020)

Volume: 9 Number: 4 December 31, 2022
  • Farah Omet *
  • Ahmet Ozcam
Journal of Economics Finance and Accounting Cover
Journal of Economics Finance and Accounting
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A WAGE-LED OR PROFIT-LED DEMAND REGIME: THE CASE OF JORDAN (1990 – 2020)

Abstract

Purpose- Recently, the Jordanian economy has been finding it increasingly challenging to create sufficient job opportunities and absorb the new labor market entrants and hence, reduce unemployment. The economy must achieve healthy and persistent economic growth. Within this context, this paper looks at the relationship between income distribution of labor and capital on economic growth. In other words, the overall purpose of this paper is to examine whether the Jordanian economy is profit-led or wage-led. Methodology- To examine the functional distribution of income in Jordan, the paper uses the period 1990-2020 (annual data) and time series techniques including stationarity test, lag length selection criteria, and augmented autoregressive distributed lag (ARDL) bounds test for cointegration. Findings- Based on the period 1990 –2020, the results indicate that the demand regime in Jordan is wage-led and not profit-led. In more specific terms, a one-percentage-point increase in the profit share decreases output by 0.08 percent. Conclusion- To rise-up to the growth and unemployment challenges that face the Jordanian economy, the government would be well-advised if it ensures that nominal wages increase in line with inflation as well as productivity. In addition, the government should adopt a wage-led strategy that rests on labour market policies whose aims are to pre-distribute income (such as minimum wage and better education and health policies) and redistribute income through progressive taxes.

Keywords

References

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Details

Primary Language

English

Subjects

Economics, Finance, Business Administration

Journal Section

Research Article

Authors

Publication Date

December 31, 2022

Submission Date

October 11, 2022

Acceptance Date

December 19, 2022

Published in Issue

Year 2022 Volume: 9 Number: 4

IZ

https://izlik.org/JA46CU66YE

Cite

RIS / Bibtex
APA
Omet, F., & Ozcam, A. (2022). A WAGE-LED OR PROFIT-LED DEMAND REGIME: THE CASE OF JORDAN (1990 – 2020). Journal of Economics Finance and Accounting, 9(4), 197-207. https://izlik.org/JA46CU66YE
AMA
1.Omet F, Ozcam A. A WAGE-LED OR PROFIT-LED DEMAND REGIME: THE CASE OF JORDAN (1990 – 2020). JEFA. 2022;9(4):197-207. https://izlik.org/JA46CU66YE
Chicago
Omet, Farah, and Ahmet Ozcam. 2022. “A WAGE-LED OR PROFIT-LED DEMAND REGIME: THE CASE OF JORDAN (1990 – 2020)”. Journal of Economics Finance and Accounting 9 (4): 197-207. https://izlik.org/JA46CU66YE.
EndNote
Omet F, Ozcam A (December 1, 2022) A WAGE-LED OR PROFIT-LED DEMAND REGIME: THE CASE OF JORDAN (1990 – 2020). Journal of Economics Finance and Accounting 9 4 197–207.
IEEE
[1]F. Omet and A. Ozcam, “A WAGE-LED OR PROFIT-LED DEMAND REGIME: THE CASE OF JORDAN (1990 – 2020)”, JEFA, vol. 9, no. 4, pp. 197–207, Dec. 2022, [Online]. Available: https://izlik.org/JA46CU66YE
ISNAD
Omet, Farah - Ozcam, Ahmet. “A WAGE-LED OR PROFIT-LED DEMAND REGIME: THE CASE OF JORDAN (1990 – 2020)”. Journal of Economics Finance and Accounting 9/4 (December 1, 2022): 197-207. https://izlik.org/JA46CU66YE.
JAMA
1.Omet F, Ozcam A. A WAGE-LED OR PROFIT-LED DEMAND REGIME: THE CASE OF JORDAN (1990 – 2020). JEFA. 2022;9:197–207.
MLA
Omet, Farah, and Ahmet Ozcam. “A WAGE-LED OR PROFIT-LED DEMAND REGIME: THE CASE OF JORDAN (1990 – 2020)”. Journal of Economics Finance and Accounting, vol. 9, no. 4, Dec. 2022, pp. 197-0, https://izlik.org/JA46CU66YE.
Vancouver
1.Farah Omet, Ahmet Ozcam. A WAGE-LED OR PROFIT-LED DEMAND REGIME: THE CASE OF JORDAN (1990 – 2020). JEFA [Internet]. 2022 Dec. 1;9(4):197-20. Available from: https://izlik.org/JA46CU66YE

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