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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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Central banking and inequalities: Taking off the blinders
TL;DR: The authors analyzes three ways in which the concern central banks show for inequalities in their official statements remains incomplete and underdeveloped: central banks tend to care about inequality for instrumental reasons only, when they do assign intrinsic value to containing inequalities, they shy away from trade-offs with the standard objectives of monetary policy that such a position entails.
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Cohesion Policy and Inequality Dynamics: Insights from a Heterogeneous Agents Macroeconomic Model
TL;DR: In this paper, the effects of different types of technology-oriented cohesion policies, aiming at the reduction of regional differences, on the convergence of regions and the dynamics of income inequality within regions are analyzed using a two-region agent-based macroeconomic model, where firms in the lagging region receive subsidies for investment in physical capital.
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Sources of Economic Renewal: From the Traditional Firm to the Knowledge Firm
TL;DR: In this paper, the authors build on the imperfection of intellectual property rights as the central motivation for the organization of firms and show that monetary incentive schemes arise naturally as an element of the organization and strategy of the firm, since profits are verifiable.
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Entrepreneurship and income inequality: a spatial panel data analysis
Hanen Ragoubi,Sana El Harbi +1 more
TL;DR: In this article, the authors used a spatial panel data analysis for both high-income and low-income countries over a period of 11 years to empirically analyze the relationship between entrepreneurship and income inequality.
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Do geographical agglomeration, growth and equity conflict?
TL;DR: In this article, the impact of economic integration on individual inequality and regional disparity in a model of endogenous growth and geography is analyzed, assuming localised learning externalities and perfect mobility of capital, which yields a trade-off for the policy maker because it increases growth and decreases inequality on the one hand, but geographical agglomeration strengthens on the other.
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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