Inequality and growth: industry-level evidence

Lisardo Erman, Daniel te Kaat*

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

3 Citations (Scopus)

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 languageEnglish
Pages (from-to)283-308
Number of pages26
JournalJournal of Economic Growth
Volume24
Issue number3
DOIs
Publication statusPublished - Sep-2019
Externally publishedYes

Keywords

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

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