Inequality, Human Capital and Development: Making the Theory Face the Facts

Chris Papageorgiou () and Nor Azam Abdul Razak

MPRA Paper from University Library of Munich, Germany

Abstract: Recent theoretical contributions assert that income inequality impacts negatively human capital accumulation, and consequently long-run growth. Galor and Zeira (1993) show that such a relationship works primarily through financial constraints, while de la Croix and Doepke (2003) demonstrate that the relationship could also work via differential fertility between poor and rich. In this paper, we first test the inequality-human capital-output hypothesis in a sample of 46 countries for the period 1970—2000. In the baseline estimation specification and various robustness checks, we obtain results that lend strong support to this relationship. Second, we examine which of the two mechanisms, finds more support in the data. and show evidence in favor of the differential fertility mechanism.

Keywords: Income inequality; financial constraints; fertility differentials; human capital; economic growth (search for similar items in EconPapers)
JEL-codes: O11 O15 O40 (search for similar items in EconPapers)
Date: 2009-11-30
New Economics Papers: this item is included in nep-dev, nep-hap and nep-hrm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:18973

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