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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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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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Occupational Choice and the Process of Development
TL;DR: In this paper, the authors model economic development as a process of institutional transformation by focusing on the interplay between agents' occupational decisions and the distribution of wealth, and demonstrate the robustness of this result by extending the model dynamically and studying examples in which initial wealth distributions have long-run effects.
Journal ArticleDOI
Labor Market Institutions and the Distribution of Wages, 1973-1992: a Semiparametric Approach.
TL;DR: In this paper, a semiparametric procedure is presented to analyze the effects of institutional and labor market factors on recent changes in the U.S. distribution of wages, including de-unionization and supply and demand shocks.
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Income distribution, political instability, and investment
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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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