A Kaleckian Perspective on Changes in the Aggregate Income Distribution in the US

In Michał Kalecki’s (1954/1991) major article on the distribution of the national income between wages and profits, he wrote that national income is measured as value added minus the cost of material inputs and as a result, <math display='block'> <mrow> <mi>n</mi><mi>a</mi><mi>t</mi><mi>o</mi><mi>n</mi><mi>a</mi><mi>l</mi><mtext>&#x2009;</mtext><mi>i</mi><mi>n</mi><mi>c</mi><mi>o</mi><mi>m</mi><mi>e</mi><mo>=</mo><mi>a</mi><mi>g</mi><mi>g</mi><mi>r</mi><mi>e</mi><mi>g</mi><mi>a</mi><mi>t</mi><mi>e</mi><mtext>&#x2009;</mtext><mi>w</mi><mi>a</mi><mi>g</mi><mi>e</mi><mi>s</mi><mo>+</mo><mi>O</mi><mi>v</mi><mi>e</mi><mi>r</mi><mi>h</mi><mi>e</mi><mi>a</mi><mi>d</mi><mi>s</mi><mo>+</mo><mi>p</mi><mi>r</mi><mi>o</mi><mi>f</mi><mi>i</mi><mi>t</mi><mi>s</mi> </mrow> </math>$$natonal\;income = aggregate\;wages + Overheads + profits$$Overheads + profits are equal to the aggregate of the percentage mark-up of prices over direct costs minus the aggregate sum of these costs, which are wages plus materials costs. The relative shares of wages, profits and overheads in national income will then be determined, Kalecki showed, by the mark-up, the ratio of materials to wage costs and the composition of industry, which affects relative shares since different industries have different mark-ups and ratios of materials to wage costs.