We study endogenous employment and distribution dynamics in a Post-Keynesian model of Kalecki-Steindl tradition. Productivity
adjustments stabilise employment and the labour share in the long run: technological change allows firms to replenish the
reserve army of workers in struggle over income shares and thereby keep wage demands in check. We discuss stability conditions
and the equilibrium dynamics. This allows us to study how legal working time and its reduction affect the equilibrium. We
find that a demand shock is likely to lower the profit share and increase the employment rate. A supply shock in contrast
tends to have detrimental effects on employment and income distribution. Labour market institutions and a working time reduction
have no long-term effect on growth, distribution and inflation in the model. The effects on the level of capital stock and
output however are positive in a wage-led demand regime. Furthermore, an erosion of labour market institutions dampens inflation
temporarily. The model provides possible explanations as to the causes of several current economic phenomena such as secular
stagnation, digitalisation, and the break-down of the Philips curve.
Keywords:Post-Keynesian economics, productivity, technological change, income distribution, employment
Forschungsbereich:Makroökonomie und öffentliche Finanzen