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Heterogeneous Population, Economic Growth and Income Distribution

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  • Nissim Ben David
  • Uri Ben-Zion

Abstract

We present an over lapping generation model with an example and a simulation of an economy that consists of three classes of workers. Agents might invest in education or capital. As people are more educated, their population growth rate is lower. The poorest class cannot borrow in order to invest in education or capital and its population is growing faster. As capital grows, educated agents can be mobilized into a state of firm owners. We show that under such conditions, while the wage per worker of the poorest class can increase, income distribution worsens as the economy grows.

Suggested Citation

  • Nissim Ben David & Uri Ben-Zion, 2014. "Heterogeneous Population, Economic Growth and Income Distribution," Journal of Social Economics, Research Academy of Social Sciences, vol. 1(4), pages 168-186.
    • Handle: RePEc:rss:jnljse:v1i4p3
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    References listed on IDEAS

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    1. Barro, Robert J. & Lee, Jong-Wha, 1994. "Sources of economic growth," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 40(1), pages 1-46, June.
    2. Persson, Torsten & Tabellini, Guido, 1994. "Is Inequality Harmful for Growth?," American Economic Review, American Economic Association, vol. 84(3), pages 600-621, June.
    3. Sayan, Serdar, 2005. "Heckscher-Ohlin revisited: implications of differential population dynamics for trade within an overlapping generations framework," Journal of Economic Dynamics and Control, Elsevier, vol. 29(9), pages 1471-1493, September.
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