Innovation and Inequality from Stagnation to Growth

Angus Chu and Pietro Peretto

No 201910, Working Papers from University of Liverpool, Department of Economics

Abstract: This study explores the evolution of income inequality in an economy featuring an endogenous transition from stagnation to growth. We incorporate heterogenous households into a Schumpeterian model of endogenous takeoff. In the pre-industrial era, the economy is in stagnation, and income inequlaity is determined by an unequal distribution of land ownership and remains stationary. When takeoff occurs, the economy experiences innovation and economic growth. In this industrial era, income inequality gradually rises until the economy reaches the balanced growth path. Finally, we calibrate the model for quantitative analysis and compare the simulation results to historical data in the UK.

Keywords: income inequality; innovation; economic growth; endogenous takeoff (search for similar items in EconPapers)
JEL-codes: D30 O30 O40 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2019-09
New Economics Papers: this item is included in nep-gro, nep-ino, nep-mac, nep-ore and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Forthcoming

Downloads: (external link)
https://www.liverpool.ac.uk/media/livacuk/schoolof ... nation,to,Growth.pdf First version, 2019 (application/pdf)

Related works:
Journal Article: Innovation and inequality from stagnation to growth (2023)
Working Paper: Innovation and Inequality from Stagnation to Growth (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:liv:livedp:201910

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