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Inequality and Economic Growth: The Perspective of the New Growth Theories
TLDR
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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(Re-)Distribution of Personal Incomes, Education and Economic Performance Across Countries
TL;DR: In this article, it is shown that a less efficient schooling technology requires more resources, which lowers pre-tax and post-tax income inequality as well as growth, and the authors attribute this partly to the redistributive effect of education spending.
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Globalisation and market structure
TL;DR: In this paper, a model of oligopoly in general equilibrium is sketched, which ensures theoretical consistency by assuming that firms are large in their own markets but small in the economy as a whole, and ensures tractability by assuming quadratic preferences defined over a continuum of goods.
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Minimum wage, exports and growth
TL;DR: In this paper, the authors study the impact of minimum wages on growth for an innovator country and show that in an open economy, a minimum wage associated with unemployment benefits can Pareto dominate laissez-faire.
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Effects of Patent Policy on Income and Consumption Inequality in a R&D Growth Model
Angus C. Chu,Angus C. Chu +1 more
TL;DR: In this paper, the effects of patent protection on income and consumption inequality were analyzed in a canonical quality-ladder growth model with endogenous labor supply, and it was shown that patent protection increases economic growth by stimulating R&D investment and income inequality by raising the return on assets.
References
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Report SeriesDOI
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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