Effects of Income Inequality on Growth through Efficiency Improvement and Capital Accumulation
AbstractIn the present paper, the inverted-U shape relationship between growth and inequality found in Chen(2003), is reexamined. We decompose productivity growth into efficiency improvement, capital accumulation and technological progress and then ascertain their determinants by employing a fixed effects and dynamic panel models. In particular, this paper focuses on the question of how economic inequality affects capital accumulation and efficiency improvement. Key findings are that inequality enhances efficiency improvement as well as capital accumulation and then undermines them as inequality widens. However, other factors such as human capital, openness, and government consumption have different effects on them.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 10220.
Date of creation: 23 Apr 2008
Date of revision:
Inequality; Growth; Fixed effects;
Other versions of this item:
- Eiji Yamamura & Inyong Shin, 2009. "Effects of Income Inequality on Growth through Efficiency Improvement and Capital Accumulation," International Economic Journal, Taylor & Francis Journals, vol. 23(2), pages 237-258.
- E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-09-05 (All new papers)
- NEP-EFF-2008-09-05 (Efficiency & Productivity)
- NEP-LAB-2008-09-05 (Labour Economics)
- NEP-MAC-2008-09-05 (Macroeconomics)
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