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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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Inequality and Growth: Nonlinear Evidence from Heterogeneous Panel Data
TL;DR: In this paper, the authors investigated the nonlinear relationship between income inequality and economic growth using a heterogeneous panel data set of 77 countries and found that while inequality hinders economic growth in most of the countries, it accelerates economic growth only in a country where the level of inequality is very low.
Technology Diffusion and Economic Inequality in a Selection of OECD Countries: Does the Augmented Kuznets Hypothesis Help Explain Technology Adoption?
Miguel Simões,Torres Preto +1 more
TL;DR: In this article, the authors search the missing link between technology diffusion and economic inequality at the country level during the last two decades in selected countries of the OECD and find that the level of inequality in a given society plays an important role in the diffusion of ICT.
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Credit constraints, growth and inequality dynamics
TL;DR: In this paper, the authors examine how credit constraints affect the dynamics of wealth and thereby the dynamic of capital and output growth, and develop standard Ak growth models that display transitional dynamics, contrary to general belief.
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The Relationship Between Income Inequality and Economic Growth: Are Transmission Channels Effective?
TL;DR: In this paper , the effect of income inequality on economic growth is examined for 143 countries and the periods between 1980 and 2017 through positive and negative channels through panel data econometric techniques.
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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