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Inequality, Growth, and Overtaking

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  • Yoshiaki Sugimoto

    (Graduate School of Economics, Kobe University)

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    Abstract

    This research develops a theory about the role of within-country income inequality leading to overtaking in economic performance among countries. The theory captures two opposing effects of inequality on factor accumulation and suggests that the qualitative change in their combined effect is a prime cause of overtaking. Due to the initial dominance of the positive effect of inequality, a less egalitarian economy follows a higher growth path in the short run, with a lower growth path in the long run. It is also shown that divergence or convergence may arise instead of overtaking, depending on the initial levels of development and inequality.

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    File URL: http://128.118.178.162/eps/dev/papers/0508/0508012.pdf
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    Bibliographic Info

    Paper provided by EconWPA in its series Development and Comp Systems with number 0508012.

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    Length: 35 pages
    Date of creation: 29 Aug 2005
    Date of revision:
    Handle: RePEc:wpa:wuwpdc:0508012

    Note: Type of Document - pdf; pages: 35
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    Web page: http://128.118.178.162

    Related research

    Keywords: Income Distribution; Economic Growth; Overtaking; Divergence; Convergence.;

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