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Wealth inequality in the long run: A Schumpeterian growth perspective

Author

Listed:
  • Jakob B. Madsen
  • Antonio Minniti
  • Francesco Venturini

Abstract

This paper extends Piketty’s analysis of the wealth-income ratio used as a proxy for wealth inequality, to allow for innovation. Drawing on a Schumpeterian (R&D-based) growth model that incorporates both tangible and intangible capital and using historical data for 21 OECD countries, we find the wealth-income ratio to be significantly and positively related to R&D intensity and the fixed capital investment ratio, but negatively related to income growth. Accounting for the innovation-induced counteracting growth-effect on the wealth-income ratio, we show that the net effect of R&D on wealth inequality is positive.

Suggested Citation

  • Jakob B. Madsen & Antonio Minniti & Francesco Venturini, 2018. "Wealth inequality in the long run: A Schumpeterian growth perspective," CAMA Working Papers 2018-35, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  • Handle: RePEc:een:camaaa:2018-35
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    File URL: https://cama.crawford.anu.edu.au/sites/default/files/publication/cama_crawford_anu_edu_au/2018-07/35_2018_madsen_minniti_venturini.pdf
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    Cited by:

    1. repec:hal:spmain:info:hdl:2441/1j4v8sl4fc9a49ankmnhv6bb6a is not listed on IDEAS
    2. Angus C. Chu & Pietro Peretto, 2019. "Innovation and Inequality from Stagnation to Growth," Working Papers 201910, University of Liverpool, Department of Economics.
    3. Popoyan, Lilit & Napoletano, Mauro & Roventini, Andrea, 2020. "Winter is possibly not coming: Mitigating financial instability in an agent-based model with interbank market," Journal of Economic Dynamics and Control, Elsevier, vol. 117(C).
    4. Iacopetta, Maurizio & Peretto, Pietro F., 2021. "Corporate governance and industrialization," European Economic Review, Elsevier, vol. 135(C).
    5. repec:hal:spmain:info:hdl:2441/7nn6fpcnia859pog8o084b54ct is not listed on IDEAS
    6. Lu Han, 2019. "The Mutable Geography of Firms' International Trade: Evidence and Macroeconomic Implications," Working Papers 201909, University of Liverpool, Department of Economics.
    7. Jakob B. Madsen & Antonio Minniti & Francesco Venturini, 2021. "The long-run investment effect of taxation in OECD countries," National Institute of Economic and Social Research (NIESR) Discussion Papers 527, National Institute of Economic and Social Research.

    More about this item

    Keywords

    Wealth-income Ratio; Piketty's Second Law; Schumpeterian Growth.;
    All these keywords.

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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