Weintraub's consumption coefficient: Some economic implications and evidence for the UK

Weintraub's consumption coefficient, the ratio of total consumer expenditure to income from employment, helps to elucidate trends in the sectoral and functional distributions of income. It simplifies and adds precision to Kaleckian macro-economics by showing how distributions of income affect the level of economic activity. Empirical estimates of the coefficient are presented for the UK from 1972 to 1995. From 1975 onwards, the coefficient has indicated a marked redistribution of income in favour of capitalist (non-employment) income, accompanied by a significant rise in the average propensity to consume from capitalist (non-employment income). Wealth effects induced by the housing boom of the 1980s have enabled capitalists' income and consumption to continue to increase after 1989 despite a fall in investment.