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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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Attitudes and allocations: status, cognitive dissonance, and the manipulation of attitudes
TL;DR: This paper studied the role of redistributive taxation in manipulating individuals' attitudes towards status and found that those individuals with the highest marginal utility from income are often the first to misconstrue or abandon these incentives in favor of alternate forms of seeking status.
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Social Protection and Growth
TL;DR: In this paper, evidence is found in favour of the proposition that more social expenditure reduces growth, while "active" social spending, including active labour market policies, make work pay policies and spending on family services, appears to have the opposite effect and may be growth-enhancing.
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The macroeconomics of poverty reduction
TL;DR: In this paper, the authors argue that research on poverty was, and continues to be, distorted by an excessive focus on micro and measurement issues and provide a review of the transmission channels of macroeconomic policies to the poor, with particular emphasis on the role of the labor market.
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Globalizing Inequality: 'Centrifugal' and 'Centripetal' Forces at Work
TL;DR: In this paper, the authors reassess national income inequalities in this era of globalization and conclude that globalization is creating a situation where virtually all the intercountry diversity of income distribution is the result of differences in what the rich and the poor get in each country.
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Rural poverty in developing countries : issues and policies
TL;DR: In this article, the authors present a policy framework for reducing rural poverty, taking into account the functional differences and overlap between the rural poor, including stable management of macroeconomic environment, transfer of assets, investment in and access to the physical and social infrastructure, access to credit and jobs, and provision of safety nets.
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.
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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.
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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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