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Inequality and Economic Growth: The Perspective of the New Growth Theories
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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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The Provision of Incentives in Firms
TL;DR: In this article, a review of existing work on the provision of incentives for workers is presented, and the authors evaluate this literature in the light of a growing empirical literature on compensation from two perspectives: first, an underlying assumption of this literature is that individuals respond to contracts that reward performance.
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Inequality and Growth in a Panel of Countries
TL;DR: In this paper, a broad panel of countries showed little overall relation between income inequality and rates of growth and investment, while the Kuznets curve is a clear empirical regularity, but it does not explain the bulk of variations in inequality across countries or over time.
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The New Growth Evidence
TL;DR: The authors surveys the recent empirical literature on economic growth, starting with a discussion of stylized facts, data problems, and statistical methods and concludes that efficiency has grown at different rates across countries, casting doubt on neoclassical models in which technology is a public good.
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A Reassessment of the Relationship between Inequality and Growth
TL;DR: In this paper, the authors used an improved data set on income inequality which not only reduces measurement error, but also allows estimation via a panel technique, and found that in the short and medium term, an increase in a country's level of income inequality has a significant positive relationship with subsequent economic growth.
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Natural resources, education, and economic development
TL;DR: The authors found that economic growth has varied inversely with the share of natural capital in national wealth across countries, and that natural capital appears to crowd out human capital, thereby slowing down the pace of economic development.
References
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Book
Income Distribution: Analysis and Policies
TL;DR: In German: Einkommensverteilung: auf dem Weg zu einer neuen EINKommensgerechtigkeit, Gabler Verlag, Wiesbaden, 1978, 172 p
Posted Content
Cross-Country Patterns of Change in Relative Wages
TL;DR: In this article, the authors investigated movements in relative wages and wage inequality across thirteen of the world's major economies, focusing on wages received by full-time male workers, and uncovered several empirical regularities: (1) most advanced industrialized economies show increases, often large; none show declining wage inequality.
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Pareto superiority of unegalitarian equilibria in stiglitz' model of wealth distribution with convex saving function'
TL;DR: In this paper, the authors extended the conclusions obtained by Stiglitz and others about the asymptotic wealth distribution in the neo-classical growth model when the saving function is convex and showed that locally stable two-class unegalitarian equilibria may exist along with the egalitarian equilibrium, but they necessarily are Pareto superior to it.
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Old Dogs and New Tricks: Determinants of the Adoption of Productivity- Enhancing Work Practices
TL;DR: In this article, the authors conduct an empirical investigation of the adoption of new work practices in a unique data set and find that the majority of the new practices are clustered rather than individual practices.
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