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Inequality and Growth

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  • Roland Benabou

Abstract

Using two unifying models and an empirical exercise, this paper presents and extends the main theories linking income distribution and growth, as well as the relevant empirical evidence. The first model integrates the political economy and imperfect capital markets theories while the second is a growth version of the prisoners dilemma. The economys growth rate is shown to fall with interest groups rent-seeking abilities, as well as with the gap between rich and poor. It is not income inequality per se that matters, however, but inequality in the relative distribution of earning and political power.

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  • Roland Benabou, 1996. "Inequality and Growth," LIS Working papers 142, LIS Cross-National Data Center in Luxembourg.
    • Handle: RePEc:lis:liswps:142
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    More about this item

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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