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Learning by Doing, Inequality, and Sustained Growth: A Middle-class Perspective

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  • Alain Desdoigts
  • Fernando Jaramillo

Abstract

This paper presents a theory of demand-driven economic growth whereby the middle class plays a prominent role in determining technical progress, while at the same time being a growth outcome. Emphasis is placed on the development and implementation process rather than on the innovation process. The entire income distribution affects the composition of demand and both the speed and extent of the learning process, which remains within an intermediate range of activity sectors for which there is middle-class-led consumption. Our framework exhibits an inverted-U relationship between inequality and growth, which has implications for growth-enhancing strategies by means of income redistributions.

Suggested Citation

  • Alain Desdoigts & Fernando Jaramillo, 2017. "Learning by Doing, Inequality, and Sustained Growth: A Middle-class Perspective," EUSP Department of Economics Working Paper Series 2017/05, European University at St. Petersburg, Department of Economics.
    • Handle: RePEc:eus:wpaper:ec2017_05
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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