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Dynamics of Income Distribution

Author

Listed:
  • Hongyi Li

    (Chinese University of Hong Kong)

  • Danyang Xie

    (Hong Kong University of Science and Technology)

  • Heng-fu Zou

    (World Bank)

Abstract

In this paper, we have obtained closed-form solutions in Cass-Koopmans growth models with heterogeneous agents. The relationship between the form of production function and the dynamics of income distribution is made explicit. We then use this relationship to determine what production structure is simultaneously consistent with facts on growth and income inequality. Our empirical findings give support to models with decreasing returns in the reproducible factor.

Suggested Citation

  • Hongyi Li & Danyang Xie & Heng-fu Zou, 2002. "Dynamics of Income Distribution," GE, Growth, Math methods 0210001, EconWPA.
  • Handle: RePEc:wpa:wuwpge:0210001
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    References listed on IDEAS

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    Cited by:

    1. Forster, Martin & La Torre, Davide & Lambert, Peter J., 2014. "Optimal control of inequality under uncertainty," Mathematical Social Sciences, Elsevier, vol. 68(C), pages 53-59.
    2. Xu, Lixin Colin & Zou, Heng-fu, 2000. "Explaining the changes of income distribution in China," China Economic Review, Elsevier, vol. 11(2), pages 149-170, December.
    3. Boccanfuso, Dorothée & Cabral, François & Cissé, Fatou & Diagne, Abdoulaye & Savard, Luc, 2007. "Stratégies de réduction de la pauvreté au Sénégal : une analyse par la modélisation en équilibre général calculable microsimulé," L'Actualité Economique, Société Canadienne de Science Economique, vol. 83(4), pages 483-528, décembre.
    4. António Afonso & Ludger Schuknecht & Vito Tanzi, 2010. "Income distribution determinants and public spending efficiency," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 8(3), pages 367-389, September.
    5. Hongyi Li & Heng-fu Zou, 2002. "Inflation, Growth, and Income Distribution: A Cross-Country Study," Annals of Economics and Finance, Society for AEF, vol. 3(1), pages 85-101, May.
    6. Gong, Liutang & Li, Hongyi & Wang, Dihai, 2012. "Health investment, physical capital accumulation, and economic growth," China Economic Review, Elsevier, vol. 23(4), pages 1104-1119.
    7. Dawood Mamoon, 2015. "How May International Trade affect Poverty in a Developing Country Setup? The Inequality Channel," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 3(5), pages 230-244, May.
    8. Judith Niehues, 2010. "Social Spending Generosity and Income Inequality: A Dynamic Panel Approach," SOEPpapers on Multidisciplinary Panel Data Research 336, DIW Berlin, The German Socio-Economic Panel (SOEP).
    9. Xinxin Wang & Kevin Z Chen, 2016. "Will China’s Demographic Transition Exacerbate Its Income Inequality? A CGE Modeling with Top-down Microsimulation," Working Papers id:11406, eSocialSciences.
    10. James Alm & Ruslan Grigoryev & Marat Kramin & Timur Kramin, 2016. "Testing Kuznets’ Hypothesis for Russian Regions: Trends and Interpretations," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(2), pages 560-568.
    11. Damir Piplica, 2015. "Corruption and Political View Point of the Governments in Transition Countries EU Members," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(1), pages 73-87, January.
    12. Been-Lon Chen & Jang-Ting Guo, 2005. "Income Inequality and Economic Growth: A Simple Theoretical Synthesis," Annals of Economics and Finance, Society for AEF, vol. 6(2), pages 319-329, November.
    13. Claudia Alvarez & David Urbano, 2008. "Entorno e Iniciativa Emprendedora: una Perspectiva Institucional," Working Papers 0807, Departament Empresa, Universitat Autònoma de Barcelona, revised Dec 2008.
    14. Hongyi Li & Heng-fu Zou, 2004. "Savings and Income Distribution," Annals of Economics and Finance, Society for AEF, vol. 5(2), pages 245-270, November.
    15. Niehues, Judith, 2010. "Social Spending Generosity and Income Inequality: A Dynamic Panel Approach," IZA Discussion Papers 5178, Institute for the Study of Labor (IZA).
    16. Muinelo-Gallo, Leonel & Roca-Sagalés, Oriol, 2013. "Joint determinants of fiscal policy, income inequality and economic growth," Economic Modelling, Elsevier, vol. 30(C), pages 814-824.
    17. Suanes, Macarena, 2016. "Foreign direct investment and income inequality in Latin America: a sectoral analysis," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    18. d'Agostino, Giorgio & Pieroni, Luca & Procidano, Isabella, 2016. "Revisiting the relationship between welfare spending and income inequality in OECD countries," MPRA Paper 72020, University Library of Munich, Germany.

    More about this item

    Keywords

    Income Distribution; Economic Growth;

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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