IDEAS home Printed from https://ideas.repec.org/p/sce/scecf9/733.html
   My bibliography  Save this paper

Inequality and the Growth Process: An Essay on Development Dynamics

Author

Listed:
  • Aminur Rahman

    () (University of Oxford)

Abstract

The existing literature on income inequality and economic growth can be decomposed broadly into two main strains. One, recently advanced, investigates the impact of the initial inequality on subsequent economic growth. The other, rather older, strain examines the evolution of inequality along with the level of development, especially in dualistic economies, referring in turn to the relationship between growth and inequality. However, neither strain adequately addresses the issue of the dynamic, contemporaneous relationship between growth and inequality. I argue here that this relationship depends both on the growth process and the state of technology. The fundamental growth factors are physical and human-capital, so the growth process could be intensive in either one of these elements or it could be a balanced ratio between the two. Given the state of technology, I model inequality as a function of the growth process, i.e., inequality as a function of the factor ratio. Two types of agents are introduced, capitalists and human-capitalists, and the relationship between the consumption growth-path of the two agents and the factor ratio is formalized. The production side is then incorporated and the relationship between the functional income distribution and the factor ratio is analyzed, all conditional on the state of technology. It then becomes possible to infer the relationship between the functional and personal income distributions. Finally, the determinants of inequality of a cross-section of countries is examined with special reference to the impact of the growth-process on income inequality. The empirical results indicate that, along with other variables, the factor ratio exhibits a significant non-linear partial association with income inequality.

Suggested Citation

  • Aminur Rahman, 1999. "Inequality and the Growth Process: An Essay on Development Dynamics," Computing in Economics and Finance 1999 733, Society for Computational Economics.
  • Handle: RePEc:sce:scecf9:733
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sce:scecf9:733. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum). General contact details of provider: http://edirc.repec.org/data/sceeeea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.