This paper offers a supply-side explanation of the cross-country variation in long-run growth and inequality. In the model human capital is 'lumpy' and public education simultaneously affects growth and income inequality. More human capital may increase or decrease growth but also measured inequality. These relationships are then discussed in the context of growth regressions. In contrast to some recent results the data show that when controlling for initial income or the educational mix of the labour force, higher (within-country) inequality is associated with lower growth. Furthermore, countries with a more productive education sector have lower inequality. Thus, institutions and policies which generate more high-skilled people or enhance the productivity of the education sector seem to affect long-run income equality and growth in a positive way.
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
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.