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Physical And Human Capital Accumulation And The Evolution Of Income And Inequality

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  • GUIDO BALDI

    (German Institute for Economic Research, Germany)

Abstract

We study how financial and educational institutions affect the evolution of income and income inequality in an overlapping generations model with heterogenous agents. While the literature mostly focuses on either physical or human capital, we make an attempt to study the joint evolution of these variables. In our model, we find that better educational institutions increase income of the individuals and are associated with lower income inequality. Better financial institutions also foster economic growth, but are associated with higher income inequality. Our model also demonstrates that focusing on aggregate measures of financial and educational institutions provides misleading results if one neglects the possibility of unequal access to these institutions.

Suggested Citation

  • Guido Baldi, 2013. "Physical And Human Capital Accumulation And The Evolution Of Income And Inequality," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 38(3), pages 57-83, September.
    • Handle: RePEc:jed:journl:v:38:y:2013:i:3:p:57-83
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    References listed on IDEAS

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    Cited by:

    1. Indunil De Silva & Sudarno Sumarto, 2015. "Dynamics Of Growth, Poverty And Human Capital: Evidence From Indonesian Sub-National Data," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 40(2), pages 1-33, June.
    2. Baldi, Guido & Sadovskis, Vairis & Šipilova, Viktorija, 2014. "Economic and Employment Effects of Microloans in a Transition Country," MPRA Paper 52736, University Library of Munich, Germany.
    3. Edward Nissan & Farhang Niroomand, 2015. "Gender and Spatial Educational Attainment Gaps in Turkey," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(1), pages 102-109, January.

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    More about this item

    Keywords

    Economic Development; Income Distribution; Institutions and Growth;
    All these keywords.

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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