From Physical to Human Capital Accumulation: Inequality and the Process of Development

Oded Galor and Omer Moav ()

GE, Growth, Math methods from University Library of Munich, Germany

Abstract: This paper develops a growth theory that captures the replacement of physical capital accumulation by human capital accumulation as a prime engine of growth along the process of development. It argues that the positive impact of inequality on the growth process was reversed in this process. In early stages of the Industrial Revolution, when physical capital accumulation was the prime source of growth, inequality stimulated development by channeling resources towards individuals with a higher propensity to save. As human capital emerged as a growth engine, equality alleviated adverse effects of credit constraints on human capital accumulation, stimulating the growth process.

Keywords: Income Distributions; Growth; Credit Constraints; Human Capital (search for similar items in EconPapers)
JEL-codes: O11 O15 O40 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2004-10-05
New Economics Papers: this item is included in nep-dev
Note: Type of Document - pdf; pages: 35
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Citations: View citations in EconPapers (836)

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Related works:
Journal Article: From Physical to Human Capital Accumulation: Inequality and the Process of Development (2004)
Working Paper: From Physical to Human Capital Accumulation: Inequality in the Process of Development (1999)
Working Paper: From Physical to Human Capital Accumulation: Inequality in the Process of Development (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpge:0410005

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