Redistribution and Growth: Pareto Improvements

Authors: Chou C-F.¹; Talmain G.²

Source: Journal of Economic Growth, Volume 1, Number 4, December 1996 , pp. 505-523(19)

Publisher: Springer

Abstract:

This paper analyzes the relationship between income distribution and economic growth. It introduces heterogeneous households who have preferences for leisure into Grossman and Helpman's model of endogenous growth (in which income distribution has no effect on economic growth). Wealth distribution affects the endogenous rate of growth as the labor supply of each individual responds inversely to his permanent income. When the labor Engel curve is concave (convex), unequal wealth distribution decreases (increases) the rate of growth. Pareto-improving-growth-enhancing wealth redistributions are characterized.

Keywords: Endogenous growth; redistribution; wealth distribution

Language: English

Document Type: Regular paper

Affiliations: 1: National Taiwan University 2: University of York

Publication date: 1996-12-01

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• In this Subject: Business ,  Economics
• By this author: Chou C-F. ;  Talmain G.

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