EFFECTIVE DEMAND AND INCOME-DISTRIBUTION IN THE CONTEXT OF AGRICULTURE-INDUSTRY DEMAND LINKAGE - A 2-SECTOR MACROECONOMIC FRAMEWORK

This paper extends recent works on the relationship between the distri bution of income and growth in demand-constrained industrial economies in a two-sector framework incorporating the industry-agriculture dema nd linkages typical of many LDCs. It argues that the issue of income d istribution between the capitalists and the workers becomes also an is sue of income distribution between the industrial capitalists and the landlords. A change in income distribution in favor of the workers, th e class of non-savers, will benefit the landlords class, which sells f ood to the workers. The redistribution toward wages can potentially be contractionary if the landlords have a sufficiently high saving rate.