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Inequality and growth: industry-level evidence

Erman, L. & te Kaat, D., Sep-2019, In : Journal of Economic Growth. 24, 3, p. 283-308 26 p.

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  • Inequality and growth: industry-level evidence

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DOI

Using a comprehensive data set of 22 industries in 86 countries over the period 1980–2012, we empirically identify the effect of inequality on industry-level value added growth. We show that an unequal income distribution increases the growth rates of physical-capital-intensive industries and reduces the growth rates of human-capital-intensive industries by lowering human capital and raising physical capital accumulation. Our study suggests that the empirical difficulty to identify a monotonic relationship between inequality and aggregate growth reflects differences in the relative importance of human and physical capital in a country’s production structure.
Original languageEnglish
Pages (from-to)283-308
Number of pages26
JournalJournal of Economic Growth
Volume24
Issue number3
Publication statusPublished - Sep-2019
Externally publishedYes

    Keywords

  • Inequality-growth nexus, Human capital, Physical capital, ECONOMIC-GROWTH, PRODUCTIVITY

ID: 95167733