This chapter reviews various interactions between the distribution of income across individuals and factors of production on the one hand, and aggregate savings, investment, and macroeconomic growth on the other. Tractable models necessarily focus on specific causal channels within this complex web of interactions, and the survey is organized around a few relevant methodological insights. In a "neoclassical" economy where all intra- and intertemporal markets exist and clear competitively, all distributional issues should be resolved before market interactions address the economic problem of allocating scarce resources efficiently, and the dynamics of income and consumption distribution have no welfare implications. Other models, recognizing that market interactions need not maximize a hypothetical representative individual's welfare, let accumulated and nonaccumulated factors of production be owned by individuals with exogenously or endogenously different saving propensities, and feature interactions between the personal and functional distribution of resources and macroeconomic accumulation. Furthermore, rates of return to savings and investments are generally heterogeneous when they are only partially (if at all) interconnected by financial markets, as is the case in overlapping generation economies, in models with binding self-financing constraints, and in models where financial market imperfections let individual consumption flows be affected by idiosyncratic uncertainty. The chapter also reviews models where distributional tensions, far from being resolved ex ante, work their way through distortionary policies and market interactions to bear directly on both macroeconomic dynamics and income distribution. Finally, it relates theoretical insights to recent empirical work on cross-country growth dynamics and on relationships between within-country inequality and macroeconomic performance.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
file. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Publisher Info
Download reference. The following formats are available: HTML,
plain text,
BibTeX,
RIS (EndNote),
ReDIF This chapter was published in: A.B. Atkinson & F. Bourguignon (ed.) Handbook of Income Distribution, , chapter 09, pages 477-540, 2000.
For technical questions regarding this item, or to correct its listing, contact: (Heidi Boesdal).
Related research
This chapter was published in the following book, which is listed on IDEAS: A.B. Atkinson & F. Bourguignon (ed.), 2000.
"Handbook of Income Distribution,"
Handbook of Income Distribution,
Elsevier,
edition 1, volume 1, number 1.
[Downloadable!] (restricted) Keywords:
Find related papers by JEL classification: O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)