Yamamura, Eiji and Shin, Inyong (2008): Effects of Income Inequality on Growth through Efficiency Improvement and Capital Accumulation.
Download (409kB) | Preview
In the present paper, the inverted-U shape relationship between growth and inequality found in Chen(2003), is reexamined. We decompose productivity growth into efficiency improvement, capital accumulation and technological progress and then ascertain their determinants by employing a fixed effects and dynamic panel models. In particular, this paper focuses on the question of how economic inequality affects capital accumulation and efficiency improvement. Key findings are that inequality enhances efficiency improvement as well as capital accumulation and then undermines them as inequality widens. However, other factors such as human capital, openness, and government consumption have different effects on them.
|Item Type:||MPRA Paper|
|Original Title:||Effects of Income Inequality on Growth through Efficiency Improvement and Capital Accumulation.|
|Keywords:||Inequality, Growth, Fixed effects|
|Subjects:||E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E25 - Aggregate Factor Income Distribution
O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O15 - Human Resources ; Human Development ; Income Distribution ; Migration
|Depositing User:||eiji yamamura|
|Date Deposited:||30. Aug 2008 09:33|
|Last Modified:||12. Feb 2013 07:52|
Alesina,A., R.Baqir., and W. Easterly., 1999. Public goods and ethnic divisions, Quarterly Journal of Economics. 114, 1243-1284.
Alesina,A. and R. Perotti., 1996. Income distribution, political instability, and investment, European Economic Review. 40, 1203-1228.
Alesina,A. and E. La Ferrara., 2000. Participation in heterogeneous communities, Quarterly Journal of Economics. 115, 1203-1228.
Arellano, M., 2003. Panel Data Econometrics: Advanced Texts in Econometrics. Oxford University Press, New York.
Baltagi, B.,2005. Econometric Analysis of Panel Data. Chippenham, John Wiley and Sons.
Banerjee, A. and E.Duflo., 2003. Inequality and growth: What can the data say? Journal of Economic Growth. 8, 267-299.
Banker R D A, A.Charnes, and W.W.Cooper., 1984. Models for Estimating Technical and Scale Efficiencies. Management Science. 30, 1078-1092.
Barro, R.J., 2000. Inequality and growth in a panel of countries. Journal of Economic Growth. 5, 5-32.
Chen, B.L., 2003. An inverted-U relationship between inequality and long-run growth. Economics Letters. 78, 205-212.
Cooper W W, M.S.Lawrence., and K.Tone., 2000. Data Envelopment Analysis. Boston ,Kluwer Academic Press.
Deininger, K. and L. Squire., 1996. A New Data Set Measuring Income Inequality. World Bank Economic Review. 10, 565-591.
Dollar,D and A. Kraay., 2003. Institutions, Trade and Growth, Journal of Monetary Economics. 50,133-162.
Duclos, J-Y., J. Esteban., and D. Ray., 2004. Concepts, Measurement, Estimation. Econometrica. 72, 1732-1772.
Esteban, J., C. Gradin., and D. Ray., 2007. An Extension of a Measure of Polarization with an Application to the Income Distribution of Five OECD Countries. Journal of Economic Inequality. 5, 1-19.
Easterly,W. and R.Levine's., 1997. Africa's Growth Tragedy: Policies and Ethnic Divisions. Quarterly Journal of Economics. 112, 1203-50.
EM-DAT: The OFDA/CRED International Disaster Database, www.em-dat.net, Université Catholique de Louvain, Brussels, Belgium.
Färe R, S.Grosskopf., M.Norris., and Z.Zhang., 1994. Productivity Growth, Technical Progress, and Efficiency Change in Industrialized Countries. American Economic Review. 84, 66-83.
Färe R, S.Grosskopf., and P.Roos., 1996. On two Definitions of Productivity. Economics Letters. 53, 269-274.
Forbes, K., 2000. A reassessment of the relationship between inequality and growth. American Economic Review. 90, 869-886.
Frankel, J.A. and D. Romer., 1999. Does Trade Cause Growth?, American Economic Review. 89, 379-399.
Heston, A., Summers,R., Aten, B., 2002. Penn World Table Version 6.1, Center for International Comparisons at the University of Pennsylvenia (CICUP), Taken from the ISP web page, http://pwt.econ.upenn.edu/
Kaldor, N., 1956. Alternative Theories of Distribution, Review of Economic Studies. 23, 83-100.
Kruger J., 2003. The Global Trends of Total Factor Productivity. Evidence from the Nonparametric Malmquist Index Approach. Oxford Economic Papers. 55, 265-286.
Kumar, S., and R.R.Russell., 2002. Technological Change, Technological Catch-up, and Capital deepening: Relative Contributions to Growth and Convergence. American Economic Review 92, 527-548.
Kuznets, S., 1955. Economic Growth and Income Inequality, American Economic Review, 45,1-28.
La Porta, R., F. Lopez-de-Silanes., A. Shleifer and R. Vishny., 1999. The Quality of Government. Journal of Law, Economics, and Organization. 15, 222-275.
Li, H. and H. Zou., 1998. Income inequality is not harmful for growth: Theory and evidence. Review of Development Economics. 2, 318-334.
Lopez, H., 2006. Growth and inequality: Are the 1990s different?. Economics Letters. 93, 18-25.
Matthew,K., 1997. State-Sponsored Mass Murder: The Onset and Severity of Genocides and Politicides. Journal of Conflict Resolution. 41,3:331-360.
Mauro, P., 1995. Corruption and Growth. Quarterly Journal of Economics. 110, 681-712. Mo, P.H., 2000. Income inequality and economic growth. Kyklos. 53, 293-316.
Montalvo, J.G., and M. Reynal-Querol., 2005. Ethnic Diversity and Economic Development. Journal of Development Economics. 76, 293-323.
Perotti, R., 1996. Growth, income distribution, and democracy: What the data say. Journal of Economic Growth. 1, 149-187.
Persson, T. and G.Tabellini., 1994. Is inequality harmful for growth? American Economic Review 84, 600-621.
Segerstrom, P.S., 1991. Innovation, Imitation, and Economic Growth, Journal of Political Economy. 99, 807-827.
Sukiassyan, G., 2007. Inequality and growth: What does the transition economy data say?. Journal of Comparative Economics. 35, 35-56.
Tabellini, G., 2005. The Role of the State in Economic Development. Kyklos. 58, 283-303. Skidmore, M., and H. Toya., 2002. Do Natural Disaster Promote Long-Run Growth. Economic Inquiry, 40, 664-687.
Yamamura, E. and I.Shin., 2007a. Technological Change and Catch-up and Capital deepening: Relative Contributions to Growth and Convergence: Comment. Economics Bulletin. 15 (3), 1-8.
Yamamura, E. and I.Shin., 2007b. The benefit of efficiency improvement on growth and convergence: A study using Japan panel data. Forthcoming in Economics Letters.
Yamamura, E. and I.Shin., 2007c. Dynamics of Agglomeration Economies and Regional Industrial Structure: The Case of the Assembly Industry of the Greater Tokyo Region, 1960-2000. Structural Change and Economic Dynamics. 18, 483-489.
Yamamura, E., T. Sonobe., and K. Otsuka., 2005. Time path in innovation, imitation, and growth: the case of the motorcycle industry in postwar Japan. Journal of Evolutionary Economics. 15, 169-186.
Zheng, J., X.Liu., and A.Bigsten., 1998. Ownership Structure and Determinants of Technical Efficiency: An Application of Data Envelopment Analysis to Chinese Enterprises (1986-1990). Journal of Comparative Economics. 26, 465-484.
Zheng, J., X.Liu., and A.Bigsten., 2003. Efficiency, Technical Progress, and Best Practice in Chinese State Enterprises (1980-1994), Journal of Comparative Economics. 31, 134-152.