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Is There A “Double Bonus” From Reducing Inequality?

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  • AKIHITO ASANO

Abstract

We study the effect of inequality on growth in an overlapping generations (OLG) model where inequality affects growth through accumulation of human capital and endogenous fertility. In contrast to much of the existing literature, we argue that the effect of inequality on growth might be non‐monotonic. Our model suggests that the effect depends on the demographic stage of development: inequality impedes growth in low‐fertility (high human capital) economies, but enhances growth in high‐fertility (low human capital) economies. Our finding casts doubt on a “double bonus” from reducing inequality in developing countries which are typically characterized by high fertility. (JEL O40, J13, O15)

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  • Akihito Asano, 2012. "Is There A “Double Bonus” From Reducing Inequality?," Economic Inquiry, Western Economic Association International, vol. 50(2), pages 551-562, April.
    • Handle: RePEc:bla:ecinqu:v:50:y:2012:i:2:p:551-562
    DOI: j.1465-7295.2010.00343.x
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    Cited by:

    1. Kunieda, Takuma & Okada, Keisuke & Shibata, Akihisa, 2014. "Finance And Inequality: How Does Globalization Change Their Relationship?," Macroeconomic Dynamics, Cambridge University Press, vol. 18(5), pages 1091-1128, July.
    2. Takuma Kunieda & Masashi Takahashi, 2022. "Inequality and institutional quality in a growth model," Evolutionary and Institutional Economics Review, Springer, vol. 19(1), pages 189-213, April.
    3. Rosenblatt, David & McGavock, Tamara J., 2013. "A note on the simple algebra of the shared prosperity indicator," Policy Research Working Paper Series 6645, The World Bank.
    4. José María, Larrú, 2012. "La relación entre la ayuda al desarrollo y la desigualdad. Evidencia y justificación teórica [Aid and inequality relationship. Evidence and theoretical justification]," MPRA Paper 38857, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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