Factor Shares and Savings in Endogenous Growth

Giuseppe Bertola

American Economic Review, 1993, vol. 83, issue 5, 1184-98

Abstract: In models of steady investment-driven growth, an individual's propensity to save depends on how much of his income is drawn from accumulated factors of production ('capital') rather than from nonaccumulated factors. When agents are heterogeneous in this respect, growth-oriented policies have distributional consequences and, in the absence of lump-sum redistribution, their implementation faces political constraints. If the median voter is capital-poor relative to the economy's representative agent, political interactions tend to slow down growth when policy acts on capital's income share and tend to accelerate it when investment subsidies are the policy instrument of choice. Copyright 1993 by American Economic Association.

Date: 1993
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Related works:
Working Paper: Factor Shares and Savings In Endogenous Growth (1991)
Working Paper: Factor Shares and Savings in Endogenous Growth (1991)
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