Income distribution and macroeconomics, mpra paper 51644, university library of. His main work is in macroeconomics, in economic growth and in the economy of israel. Dynamic macroeconomic theory department of economics, dse. Feb 01, 2011 this paper reconsiders the significance of income distribution in macroeconomics, a topic that has attracted the attention of economists since the 1990s. It has advanced a novel viewpoint that heterogeneity, and thus income distribution, plays an important role in the determination of aggregate economic activity and economic growth in the short run as well as in the long run. Economics 2149 distributional macroeconomics spring 2018. Inequality and growth economics bibliographies cite. Yet the main argument of the book rests on how wealth inequality. Readings in the theory of economic development, blackwell, oxford, 2000. Finance and inequality international monetary fund. Oded galor, brown university and nber david hemous. Fertility, income distribution and economic growth. Part of the international economic association series book series iea.
Oded galor population studies and training center brown. It is shown that in the presence of credit markets imperfections and indivisibilities in investment in human capital, the initial distribution of wealth affects aggregate output and investment both in the short and in the long run, as there are multiple steady states. Income distribution and macroeconomics galor, oded and zeira, joseph brown university, hebrew university 1 july 1988 online at mpra paper no. Development reading list fall 2007 new york university. The literature on the relationship between income distribution and economic development, which follows the capital market imperfection approach, shows that income inequality affects longrun economic performance provided that the production technology of human capital or final output is nonconvex. Galor, o 2011, inequality, human capital formation, and the process of development, brown university working papers 20117. Galor zeira 1993 one such mechanism is highlighted by o. I am a professor of economics at the hebrew university of jerusalem.
Convex technology and the role of intergenerational transfers. Important contributions to this line of research are galor and zeira. Initially the essential volume analyses the importance of inequality and development, past and present. Editor, journal of population economics, 2018 coeditor, macroeconomic dynamics, 2018 codirector of the nber research group on income distribution and macroeconomics, 1995 member of the editorial board, economics and human biology, 2002 member of the editorial board, journal of economic inequality, 2003. Introduction inequality and the development process. Economic theory and economic policy have long seen income and its distribution as a central concern. Assessing the impact of income inequality on economic growth. The nature of the relationship between income inequality and economic.
Economic growth and income distribution implications of public. Acknowledgements introduction inequality and the development process. Income distribution and macroeconomics, mpra paper 51644, university library of munich, germany, revised 01 sep 1989. The study demonstrates that the longrun equilibrium depends on the initial distribution of income. Developing countries with highly unequal income distributions, such as brazil or south africa, face an uphill battle in reducing inequality. Endogenous growth and income inequality, journal of political economy 100, pp. The persistence of inequality in a convex technology framework. Market failures, education and macroeconomics springerlink. Mar 12, 2017 poor economics 2012 penguin books london. Income distribution and macroeconomics, working papers 2012, brown university, department of economics.
Lourys 1981 intergenerational transfers and the distribution of earnings is an excellent starting point that describes the ahistoric, ergodic model with no persistent historical influences. They advanced the novel viewpoint that heterogeneity, and thus income distribution, plays an important role in the determination of aggregate economic activity and economic growth. Classical economists such as adam smith 17231790, thomas malthus 17661834, and david ricardo 17721823 concentrated their attention on factor incomedistribution, that is, the. Assuming children of educated workers are more likely to become educated, this fertility differential increases the proportion of unskilled workers, reducing their. I specialize in economic growth, in technology and its adoption across countries, in income distribution and how it is related to macroeconomics, in money and inflation and in the economy of israel. Oded galor and joseph zeira, income distribution and macroeconomics. Galor and zang support the arguments put forth in their paper by using a simple variation of the model published by galor and zeira in 1993 and 70 crosssectional growth regressions in the style of barros 1991 work. It is shown that in the presence of credit markets imperfections and indivisibilities in investment in human capital, the initial distribution of wealth. In particular, banerjee and newman 1993, galor and zeira 1993, benabou 1996b,1. This paper investigates the relationship between income distribution, democratic institutions, and growth.
Public finance decisions also influence the distribution of income. At present, one understanding of this relationship is that given by what oded galor called the. Galor and zeira 1988, 1993, has underlined the role of heterogeneity in the. He is the aaron and michael chilewich professor of economics at the hebrew university of jerusalem. This paper analyzes the role of wealth distribution. The present paper, that features neither inequality nor multiple equilibria, takes a. The modern perspective, originated by galor and zeira 1988, 1993, has underscored the role of heterogeneity in the determination of macroeconomic activity, and has demonstrated that income distribution is an important determinants of the growth process and the evolution of income per capita. Inequality and growth economics bibliographies cite this.
Matching, heterogeneity, and the evolution of income distribution. The galor zeira model is the first macroeconomic model to explore the role of heterogeneity in the determination of macroeconomic behavior. Macroeconomics definition the business professor, llc. Evolutionary economics, growth and development, population economics. Falato, antonio, dalida kadyrzhanova, roberto steri, and jae sim. In this innovative collection, oded galor brings together some of the most influential contributions to the modern literature on income distribution and economic growth. Inequality, human capital formation and the process of. Imperfect credit markets, household wealth distribution, and. In economics, income distribution covers how a countrys total gdp is distributed amongst its population. Brown university, hebrew university 1 july 1988 online at mpra paper no. An overview oded galor part i inequality and development. Inequality, human capital formation and the process of development. There are many macroeconomic and non macro economics factors or variables related to the countrys economic growth. Income distribution and macroeconomics oded galor and joseph zeira galor zeira inequality and growth 1 57.
Bertolamarket structure and income distribution in endogenous growth models. The banerjeenewman and galor zeira papers break with this tradition, as do others. Effects of income inequality, researchers have found, include higher rates of health and social problems, and lower rates of social goods, a lower populationwide satisfaction and happiness and even a lower level of economic growth when human capital is neglected for highend consumption. Among the most important factors believed to be related to the rate of economic growth, the issue of income inequality in the process of national income distribution is the vital one. Oded galor and joseph zeira no 2012, working papers from brown university, department of economics abstract. In the presence of imperfect credit markets, the distribution of wealth affects the aggregate investment in human capital galor and zeira 1993. Goldberger professor of economics at brown university. They argue that when credit markets are either absent or do not work. Persistent inequality, corruption, and factor productivity. Reprinted in readings in the theory of economic development, d. We average the income and health data to match the education data. Income distribution and macroeconomics galor, oded and zeira, joseph 1988. Zeira income distribution and macroeconomics, res, 1993, who argued that the negative link between inequality and growthdevelopment may exist quite independent of the political economy channel. Income distribution and macroeconomics munich personal.
Deininger, klaus and squire, lyn 1996 a new data set measuring income inequality. This paper analyzes the role of income distribution in macroeconomic analysis. Income distribution and macroeconomics oded galor brown university and jos eph zeira the hebrew university of jerusalem first version received january 1991. All these papers emphasize the importance of the distribution of income and human capital on economic performance and growth, and make predictions regarding the evolution of income. This paper shows that if we add a second assumption, that technology is nonconvex, the inherited distribution of wealth. Oded galor has codirected the nber research group on income distribution and macroeconomics and he is a research fellow of the cepr, glo, and iza, a research associate of the nber and cesifo, a sackler fellow at telaviv university, a fellow of the economics department at the hebrew university, doctor honoris causa, poznan university of. Oct 06, 2020 in the presence of imperfect credit markets, the distribution of wealth affects the aggregate investment in human capital galor and zeira 1993. In contrast to the representative agent approach that dominated the field of macroeconomics till the early 1990s and argued that heterogeneity has no impact on macroeconomic activity, the model demonstrates that in the presence of capital markets.
Demographic transition, income distribution and economic. The data on education is available for 1960, 1970, 1980, 1990 and 2000. Insights from a new instrument journal of development economics topic 5. Joseph zeira, hebrew university of jerusalem junyi zhu. Request pdf on jan 1, 2005, giuseppe bertola and others published income distribution in macroeconomic models find, read and cite all the research you need on researchgate. Oded galor born 1953 is an israeli economist who is currently herbert h. Zeira income distribution and macroeconomics, res, 1993. Atkinson 1997, bringing income distribution in from the cold part ii the origins of the modern perspective 2. Other closely related papers include banerjee and newman 1993, galor and zeira 1993, benabou 1996, durlauf 1996, and fernandez and rogerson 1996. Oded galor and joseph zeira 1993, income distribution and macroeconomics. Uses utipunido pay inequality data to improve on the ds data set of household income inequlaity. Inequality and economic development, edward elgar, cheltenham, uk, 2009. Omer moav hebrew university of jerusalem december 21, 2000 a bst r act i show that nonconvexities in technology, assumed in the capi tal market imperfection literature on the relationship between income distribution and economic growth, can be replaced by an assumption that the bequest. Zeira 1993restud income distribution and macroeconomics a bit challenging mathematically, but an important and rewarding paper.
Inequality may therefore adversely affect macroeconomic activity and economic. Galor zeira 1993 an alternative mecahnism was highlighted by o. This paper analyzes the role of wealth distribution in macroeconomics through investment in human capital. Their arguement operates through the credit market inperfection channel.
The data on income per capita is annual, while the data on life expectancy is for 5year intervals. Educated workers in these countries have a much lower birthrate than uneducated workers. Rising intangible capital, shrinking debt capacity and the us corporate savings glut, mimeo. Among those who have explored various mechanisms to explain the negative aspects of inequality, galor and zeira 1993 theoretically argued that, in developed economies with imperfect capital. Pdf this paper analyzes the role of wealth distribution in macroeconomics.
Dissertation economics bibliographies cite this for me. So, understanding the relationship between these two economic variables is important. Linkage between economic growth and income inequality in. Income distribution dynamics with endogenous fertility. Effects of income inequality on economic growth vox, cepr. For the top 21 industrialised countries, counting each person equally, life expectancy is lower in more. It has advanced a novel viewpoint that heterogeneity, and thus income. For example, we use the average of the gdp per capita observations from 1955 to 1965 as income measure for. Pdf income distribution and macroeconomics researchgate. The model was developed by oded galor and joseph zeira in 1988, and it was published in the paper income distribution and macroeconomics, 1993. Income distribution in macroeconomic models request pdf. Crosscountry variation in family size and income distribution patterns are an important element of such an explanation.
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