Inequality, Growth, and Overtaking

Yoshiaki Sugimoto
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Yoshiaki Sugimoto: Graduate School of Economics, Kobe University

Development and Comp Systems from EconWPA

Abstract: This research develops a theory about the role of within-country income inequality leading to overtaking in economic performance among countries. The theory captures two opposing effects of inequality on factor accumulation and suggests that the qualitative change in their combined effect is a prime cause of overtaking. Due to the initial dominance of the positive effect of inequality, a less egalitarian economy follows a higher growth path in the short run, with a lower growth path in the long run. It is also shown that divergence or convergence may arise instead of overtaking, depending on the initial levels of development and inequality.

Keywords: Income Distribution; Economic Growth; Overtaking; Divergence; Convergence. (search for similar items in EconPapers)
JEL-codes: D31 O11 O15 O40 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev
Date: 2005-08-29
Note: Type of Document - pdf; pages: 35
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http://129.3.20.41/eps/dev/papers/0508/0508012.pdf (application/pdf)

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