Age distribution and age heterogeneities in economic profiles as sources of conflict between efficiency and equity in the Solow-Stiglitz framework

Piero Manfredi and Luciano Fanti

Discussion Papers from Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy

Abstract: Much of the debate on the role played by the age distribution of the population in shaping the growth regimes of the neoclassical growth model of Solow has focused on the notion of capital dilution and the possibility that "optimal" population growth regimes (OPGR) exist. Conversely less has been done as regards the implications of growth regimes for distribution, probably because Stiglitz's (1969) fundamental result predicts that economic growth sets in motion forces of an "essentially" egalitarian nature. In this paper we start to investigate how distinct regimes of population growth and age distribution affect income and wealth distribution in a Solow-Stiglitz framework embedding a single but fundamental "inequality preserving" force, e.g. an heterogeneous age profile of labour productivity. Our main results are that 1) a population growth regime characterised by minimal inequality (a "MinIPGR) often exists, but 2) it is usually amazingly "far" from the corresponding OPGR, when also an OPGR exists. This seems to suggest a potentially striking trade-off between efficiency and equity during economic growth.

Keywords: neoclassical growth model; population growth and age distribution; income distribution; Optimal Population Growth Rate; Minimal Inequality Population Growth Rate (search for similar items in EconPapers)
Date: 2004-01-01
Note: ISSN 2039-1854
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Citations: View citations in EconPapers (12)

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