Abstract
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 language | English |
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Pages (from-to) | 283-308 |
Number of pages | 26 |
Journal | Journal of Economic Growth |
Volume | 24 |
Issue number | 3 |
DOIs | |
Publication status | Published - Sep-2019 |
Externally published | Yes |
Keywords
- Inequality-growth nexus
- Human capital
- Physical capital
- ECONOMIC-GROWTH
- PRODUCTIVITY