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Income Inequality, TFP, and Human Capital

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  • Sequeira, Tiago
  • Santos, Marcelo
  • Ferreira-Lopes, Alexandra

Abstract

A fruitful recent theoretical literature has related human capital and technological development with income (and wages) inequality. However, empirical assessments on the relationship are still scarce. We relate human capital and total factor productivity (TFP) with inequality and discover that, when countries are assumed as heterogeneous and dependent cross-sections, human capital is the most robust determinant of inequality, contributing to increase inequality, as predicted by theory. There is evidence of great heterogeneity on the effects of TFP and Openness across countries. These new empirical results open a wide avenue for theoretical research on the country-specific features conditioning the causal relationship from human capital, technology and trade to inequality.

Suggested Citation

  • Sequeira, Tiago & Santos, Marcelo & Ferreira-Lopes, Alexandra, 2014. "Income Inequality, TFP, and Human Capital," MPRA Paper 55471, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:55471
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    Cited by:

    1. Jakub Bartak, 2017. "Does income inequality hamper human capital accumulation in OECD countries?," Managerial Economics, AGH University of Science and Technology, Faculty of Management, vol. 18(2), pages 133-145.
    2. Jakub Bartak & Łukasz Jabłoński, 2020. "Inequality and growth: What comes from the different inequality measures?," Bulletin of Economic Research, Wiley Blackwell, vol. 72(2), pages 185-212, April.
    3. Clifford Afoakwah & Xin Deng & Ilke Onur, 2023. "Reforms and education inequality in Ghana," Review of Development Economics, Wiley Blackwell, vol. 27(2), pages 853-878, May.
    4. Bartak Jakub & Jabłoński Łukasz, 2016. "Human Capital Versus Income Variations: Are They Linked in OECD Countries?," Journal of Management and Business Administration. Central Europe, Sciendo, vol. 24(2), pages 56-73, June.
    5. Manuela Magalhães & Tiago Sequeira & Óscar Afonso, 2019. "Industry Concentration and Wage Inequality: a Directed Technical Change Approach," Open Economies Review, Springer, vol. 30(3), pages 457-481, July.
    6. Jabłoński Łukasz, 2019. "Inequality in Economics: The Concept, Perception, Types, and Driving Forces," Journal of Management and Business Administration. Central Europe, Sciendo, vol. 27(1), pages 17-43, March.

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    More about this item

    Keywords

    income inequality; human capital; technology;
    All these keywords.

    JEL classification:

    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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