Effects of Income Inequality on Growth through Efficiency Improvement and Capital Accumulation

Eiji Yamamura () and Inyong Shin

MPRA Paper from University Library of Munich, Germany

Abstract: In the present paper, the inverted-U shape relationship between growth and inequality found in Chen(2003), is reexamined. We decompose productivity growth into efficiency improvement, capital accumulation and technological progress and then ascertain their determinants by employing a fixed effects and dynamic panel models. In particular, this paper focuses on the question of how economic inequality affects capital accumulation and efficiency improvement. Key findings are that inequality enhances efficiency improvement as well as capital accumulation and then undermines them as inequality widens. However, other factors such as human capital, openness, and government consumption have different effects on them.

Keywords: Inequality; Growth; Fixed effects (search for similar items in EconPapers)
JEL-codes: E25 O15 (search for similar items in EconPapers)
Date: 2008-04-23
New Economics Papers: this item is included in nep-eff, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Effects of Income Inequality on Growth through Efficiency Improvement and Capital Accumulation (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:10220

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