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Inequality and Economic Growth: The Perspective of the New Growth Theories
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This paper analyzed the relationship between inequality and economic growth from two directions, showing that when capital markets are imperfect, there is not necessarily a trade-off between equity and efficiency, and provided an explanation for two recent empirical findings, namely, the negative impact of inequality and the positive effect of redistribution upon growth.Abstract:
We analyze the relationship between inequality and economic growth from two directions. The first part of the survey examines the effect of inequality on growth, showing that when capital markets are imperfect, there is not necessarily a trade-off between equity and efficiency. It therefore provides an explanation for two recent empirical findings, namely, the negative impact of inequality and the positive effect of redistribution upon growth. The second part analyzes several mechanisms whereby growth may increase wage inequality, both across and within education cohorts. Technical change, and in particular the implementation of "General Purpose Technologies," stands as a crucial factor in explaining the recent upsurge in wage inequality.read more
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Journal ArticleDOI
Entrepreneurs, moral hazard, and endogenous growth
J. Philipp Reiß,Lutz Weinert +1 more
TL;DR: In this paper, the authors analyze an endogenous growth model with agents differing in their endowments and show that the first best solution can either be achieved by decentralized financial contracting or by employing a project-specific subsidy policy.
Posted Content
Interregional Differences in Adoptive Abilities: An Alternative Framework
TL;DR: In this paper, a model of regional convergence that encapsulates the impact of infrastructure in the absorptive ability of a regional economy is presented, where the possibility that high technological gaps might act as obstacles to convergence is explicitly taken into consideration.
Posted Content
Social mobility and endogenous cycles in redistribution
TL;DR: In this article, a variety of redistributive policies with no unique relationship to inequality are presented. But the standard positive correlation between redistribution and inequality is confirmed when the pattern of social mobility, potentially prevailing in a free market, proves robust to public action.
Equality and Efficiency in Advanced Democracies: Revisiting the Leaky Bucket Hypothesis
TL;DR: This article showed that countries with Anglo or Germanic legal origins are significantly more likely to experience trade-offs than countries with French legal origin and showed that more wage coordination increases the likelihood that a country will experience a trade-off between income equality and market efficiency.
Book ChapterDOI
Income Inequality in Developing Countries, Past and Present
TL;DR: In this paper, the authors give a historical overview on how income inequality has been addressed in developing countries and discuss contemporary issues of income inequality, especially in the context of growing globalization, and the right mix of macroeconomic, fiscal, labour market and social policies (policy coherence) can reverse the rising trend in income inequality.
References
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Initial conditions and moment restrictions in dynamic panel data models
Richard Blundell,Stephen Bond +1 more
TL;DR: In this paper, two alternative linear estimators that are designed to improve the properties of the standard first-differenced GMM estimator are presented. But both estimators require restrictions on the initial conditions process.
The mechanics of economic development
Abstract: This paper considers the prospects for constructing a neoclassical theory of growth and international trade that is consistent with some of the main features of economic development. Three models are considered and compared to evidence: a model emphasizing physical capital accumulation and technological change, a model emphasizing human capital accumulation through schooling, and a model emphasizing specialized human capital accumulation through learning-by-doing.
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Legal Determinants of External Finance
TL;DR: The authors showed that countries with poorer investor protections, measured by both the character of legal rules and the quality of law enforcement, have smaller and narrower capital markets than those with stronger investor protections.
Journal ArticleDOI
An Exploration in the Theory of Optimum Income Taxation
TL;DR: In this paper, the authors make the following simplifying assumptions: (1) Intertemporal problems are ignored; (2) the tax system that would bring about that result would completely discourage unpleasant work; and (3) what such a tax schedule would look like; and what degree of inequality would remain once it was established.
Journal ArticleDOI
Income Distribution and Macroeconomics
Oded Galor,Joseph Zeira +1 more
TL;DR: The authors analyzes the role of wealth distribution in macroeconomics through investment in human capital and shows that the initial distribution of wealth affects aggregate output and investment both in the short and in the long run, as there are multiple steady states.
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