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The Evolution of Income and Fertility Inequalities over the Course of Economic Development: A Human Capital Perspective

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  • Isaac Ehrlich
  • Jinyoung Kim

Abstract

Using an endogenous-growth, overlapping-generations framework in which human capital is the engine of growth, we trace the dynamic evolution of income and fertility distributions and their interdependencies over three endogenous phases of economic development. In our model, heterogeneous families determine fertility and children's human capital, and generations are linked via parental altruism and social interactions. We derive and test discriminating propositions concerning the dynamic behavior of inequalities in fertility, educational attainments, and three endogenous income inequality measures--family-income inequality, income-group inequality, and the Gini coefficient. In this context, we also reexamine the "Kuznets hypothesis" concerning the relation between income growth and inequality.

Suggested Citation

  • Isaac Ehrlich & Jinyoung Kim, 2007. "The Evolution of Income and Fertility Inequalities over the Course of Economic Development: A Human Capital Perspective," Journal of Human Capital, University of Chicago Press, vol. 1(1), pages 137-174.
  • Handle: RePEc:ucp:jhucap:v:1:i:1:y:2007:p:137-174
    DOI: 10.1086/523878
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    3. Felicia Ionescu, 2011. "Risky Human Capital and Alternative Bankruptcy Regimes for Student Loans," Journal of Human Capital, University of Chicago Press, vol. 5(2), pages 153-206.
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    5. Adam Cook & Isaac Ehrlich, 2018. "Was higher education a major channel through which the US became an economic superpower in the 20th century?," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 23(4), pages 515-553, October.
    6. Roxana Idu, 2019. "Source Country Economic Development and Dynamics of the Skill Composition of Emigration," Economies, MDPI, Open Access Journal, vol. 7(1), pages 1-18, March.
    7. Isaac Ehrlich & Jinyoung Kim, 2015. "Immigration, Human Capital Formation, and Endogenous Economic Growth," Journal of Human Capital, University of Chicago Press, vol. 9(4), pages 518-563.
    8. Isaac Ehrlich & Yun Pei, 2020. "Human Capital as Engine of Growth: The Role of Knowledge Transfers in Promoting Balanced Growth within and across Countries," Asian Development Review, MIT Press, vol. 37(2), pages 225-263, September.
    9. Isaac Ehrlich, 2009. "The Mystery of Human Capital as Engine of Growth, or Why the US Became the Economic Superpower in the 20th Century," Ensayos Económicos, Central Bank of Argentina, Economic Research Department, vol. 1(56), pages 41-93, October -.
    10. Arsham Reisinezhad, 2018. "Economic Growth and Income Inequality in Resource Countries: Theory and Evidence," Working Papers halshs-01707976, HAL.
    11. Konstantinos Angelopoulos & James Malley & Apostolis Philippopoulos, 2017. "Human Capital Accumulation and Transition to Skilled Employment," Journal of Human Capital, University of Chicago Press, vol. 11(1), pages 72-105.
    12. Jonathan Guryan, 2009. "The Race between Education and Technology: A Review Article," Journal of Human Capital, University of Chicago Press, vol. 3(2), pages 177-196.
    13. Nathan D. Grawe, 2010. "Primary and Secondary School Quality and Intergenerational Earnings Mobility," Journal of Human Capital, University of Chicago Press, vol. 4(4), pages 331-364.
    14. Theodore R. Breton, 2015. "Higher Test Scores or More Schooling? Another Look at the Causes of Economic Growth," Journal of Human Capital, University of Chicago Press, vol. 9(2), pages 239-263.
    15. G. C. Lim & Paul D. McNelis, 2014. "Income Inequality, Trade and Financial Openness," Melbourne Institute Working Paper Series wp2014n07, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    16. Baris Kaymak, 2009. "Ability Bias and the Rising Education Premium in the United States: A Cohort-Based Analysis," Journal of Human Capital, University of Chicago Press, vol. 3(3), pages 224-267.
    17. Todd Schoellman, 2010. "The Occupations and Human Capital of U.S. Immigrants," Journal of Human Capital, University of Chicago Press, vol. 4(1), pages 1-34.
    18. Joyce J. Chen, 2015. "The Impact of Skill-Based Immigration Restrictions: The Chinese Exclusion Act of 1882," Journal of Human Capital, University of Chicago Press, vol. 9(3), pages 298-328.
    19. Matthew Collin & David N. Weil, 2020. "The Effect of Increasing Human Capital Investment on Economic Growth and Poverty: A Simulation Exercise," Journal of Human Capital, University of Chicago Press, vol. 14(1), pages 43-83.
    20. Turnovsky, Stephen J., 2015. "Economic growth and inequality: The role of public investment," Journal of Economic Dynamics and Control, Elsevier, vol. 61(C), pages 204-221.
    21. Stephen J. Turnovsky, 2011. "The Accumulation of Human Capital and Income Inequality in a Two-Sector Economy," Journal of Human Capital, University of Chicago Press, vol. 5(4), pages 418-452.
    22. Kevin M. Murphy & Curtis Simon & Robert Tamura, 2008. "Fertility Decline, Baby Boom, and Economic Growth," Journal of Human Capital, University of Chicago Press, vol. 2(3), pages 262-302.
    23. Cook, Adam & Ehrlich, Isaac, 2018. "Was Higher Education a Major Channel through which the United States Became an Economic Superpower in the 20th Century?," ADBI Working Papers 820, Asian Development Bank Institute.
    24. Stephen J. Turnovsky, 2013. "The relationship between economic growth and inequality," New Zealand Economic Papers, Taylor & Francis Journals, vol. 47(2), pages 113-139, August.

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    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D3 - Microeconomics - - Distribution
    • J1 - Labor and Demographic Economics - - Demographic Economics
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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