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Economic Growth and Income Equality: Implications of a Behavioural Model of Economic Growth for Pub lic Policy

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Author Info
Morris Altman

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Abstract

A behavioural model of the firm and economic growth is presented whereby the level of economic efficiency, the choice of technology, and the rate of technical change, are all affected by firm organization and institutional variables. In this model, high- and low-wage firms can be cost competitive even in the most competitive of product market regimes because of the efficiency effect that relatively high rates of labour compensation can have through their effect on firm organization. From this perspective, improving the material wellbeing of the relatively less well-off in society need not be at the expense of those who are better off and there need not be a trade-off between more income equality and growth. International datasets are analyzed, lending support to the view.

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File URL: http://economics.ca/cgi/jab?journal=cpp&view=v29s1/CPPv29s1p087.pdf
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Publisher Info
Article provided by University of Toronto Press in its journal Canadian Public Policy.

Volume (Year): 29 (2003)
Issue (Month): s1 (January)
Pages: 87-118
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Handle: RePEc:cpp:issued:v:29:y:2003:i:s1:p:87-118

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  1. Jonathan Temple, 1999. "The New Growth Evidence," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 112-156, March. [Downloadable!] (restricted)
  2. Reder, Melvin W, 1982. "Chicago Economics: Permanence and Change," Journal of Economic Literature, American Economic Association, vol. 20(1), pages 1-38, March. [Downloadable!] (restricted)
  3. Pritchett, Lant, 1997. "Divergence, Big Time," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 3-17, Summer. [Downloadable!] (restricted)
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  4. O'Neill, Donal, 1995. "Education and Income Growth: Implications for Cross-Country Inequality," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1289-1301, December. [Downloadable!] (restricted)
  5. Stiglitz, Joseph E, 1987. "The Causes and Consequences of the Dependence of Quality on Price," Journal of Economic Literature, American Economic Association, vol. 25(1), pages 1-48, March. [Downloadable!] (restricted)
  6. Nelson, Richard R, 1998. "The Agenda for Growth Theory: A Different Point of View," Cambridge Journal of Economics, Oxford University Press, vol. 22(4), pages 497-520, July.
  7. Osberg, L., 1995. "The Equity/Efficiency Trade-Off in Retrospect," Department of Economics at Dalhousie University working papers archive 95-04, Dalhousie, Department of Economics.
  8. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S71-102, October. [Downloadable!] (restricted)
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