Enterprise, Inequality and Economic Development

Huw Lloyd-Ellis and Dan Bernhardt

The Review of Economic Studies, 2000, vol. 67, issue 1, 147-168

Abstract: We characterize an equilibrium development process driven by the interaction of the distribution of wealth with credit constraints and the distribution of entrepreneurial skills. When efficient entrepreneurs are relatively abundant, a "traditional" development process emerges in which the evolution of macroeconomic variables accord with empirical regularities and income inequality traces out a Kuznets curve. If, instead, efficient entrepreneurs are relatively scarce, the model generates long-run "distributional cycles" driven by the endogenous interaction between credit constraints, entrepreneurial efficiency and equilibrium wages.

Date: 2000
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Working Paper: Enterprise, Inequality and Economic Development (1993)
Working Paper: Enterprise, Inequality and Economic Development (1993)
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Persistent link: https://EconPapers.repec.org/RePEc:oup:restud:v:67:y:2000:i:1:p:147-168.

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