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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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Towards A Virtuous Spiral Between Poverty Reduction And Growth: Comparing Sub Saharan Africa With The Developing World
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Mineral wealth and human capital accumulation: a nonparametric approach
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Insisting on equity: A redistribution approach to education
TL;DR: In this article, the authors trace the current increase in inequality through income and wealth distributions, and argue that educational equity should also be a priority for all nations, and provide evidence that an equitable redistribution approach to education may serve as part of an answer to these problems.
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Does income inequality sand or grease the wheels of entrepreneurial activity? International evidence
TL;DR: This paper examined the influence of income inequality on entrepreneurship and found that the effect of inequality switches across the prevalence of entrepreneurship, with a positive effect when inequality encourages entrepreneurship and a negative effect when entrepreneurship discourages entrepreneurship.
References
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An Exploration in the Theory of Optimum Income Taxation
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Income Distribution and Macroeconomics
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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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