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Objectives The purpose of the paper is to examine the impact of labour incomes on economic activity and growth in Poland. Material and methods The thesis of the paper is rooted in the hypothesis of underconsumption and it claims that a proportion of labour incomes to the domestic product exerts an influence on the structure and the value of the aggregate demand and thus it eventually has an effect on economic activity. Empirical analysis provided refers to macroeconomic data for the period 2010-2019. Results The results support the thesis; relatively low growth of labour incomes is followed by low rates of economic growth and investment and higher rates of unemployment. Conclusions The analysis of changes in real production per employee, real wages, the rate of unemployment, the rate of GDP growth and changes in households’ consumption spending strongly support the claim that low wages at least periodically stand behind a demand constraint in the Polish economy and that they impair economic results.

This article discusses the hypothesis of underconsumption, which is a particular form of the concept of demand constraint. Rising income inequality and falling shares of labour incomes in GDP have been observed in developed countries in recent decades. In a traditional approach related to the hypothesis, wages constitute a major source of financing consumption spending, while a falling share of wages brings about a diminishing share of consumption in GDP and leads to the development of unsustainable forms of financing consumption with credit. As a consequence, high capital incomes fail to generate new investment and economies fall into stagnation. Since these developments are typical of contemporary advanced economies, the hypothesis gains credibility and is worthy of careful analysis. The article presents different interpretations of the hypothesis and related growth and equilibrium theories through the history of economic thought from early classical economists to contemporary research. The review shows that the hypothesis has been a challenge for economists and is still far from fully comprehended. The last part of the paper explains why statistical analysis is of little help in either conditionally accepting or disproving the hypothesis.