This paper (ⅰ) examines the role of income distribution in the determination of the average saving rate and the growth process in dual and mature economies, and (ⅱ) revisits the Pasinetti and neo-Pasinetti theorems. The profit share may influence saving because of differences in the saving rates across households (the Pasinetti theorem) or because firms retain part of their earnings (the neo-Pasinetti theorem). The two mechanisms are not mutually exclusive, and the alignment between warranted and natural growth rates in mature economies can happen through feedback effects from employment to the distribution of income.

Like the functional distribution of income, wage inequality is subject to fairly regular cyclical fluctuations. In this paper, we (ⅰ) analyze sources of these fluctuations, (ⅱ) present models of endogenous cycles that include heterogeneous labor and wage inequality, (ⅲ) show that these models generate patterns of both wage inequality and the functional income distribution that are in line with the evidence, and (ⅳ) caution against any extrapolation of cyclical patterns to long-term trends and beliefs in expansionary aggregate demand policy as the key instrument to promote greater economic equality.