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Inequality, Growth, and Overtaking

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  • Yoshiaki Sugimoto

    (Graduate School of Economics, Kobe University)

Abstract

This research develops a theory about the role of within-country income inequality leading to overtaking in economic performance among countries. The theory captures two opposing effects of inequality on factor accumulation and suggests that the qualitative change in their combined effect is a prime cause of overtaking. Due to the initial dominance of the positive effect of inequality, a less egalitarian economy follows a higher growth path in the short run, with a lower growth path in the long run. It is also shown that divergence or convergence may arise instead of overtaking, depending on the initial levels of development and inequality.

Suggested Citation

  • Yoshiaki Sugimoto, 2005. "Inequality, Growth, and Overtaking," Development and Comp Systems 0508012, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpdc:0508012
    Note: Type of Document - pdf; pages: 35
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    More about this item

    Keywords

    Income Distribution; Economic Growth; Overtaking; Divergence; Convergence.;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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