Wealth Inequality in the Long Run: A Schumpeterian Growth Perspective

2020 ◽  
Author(s):  
Jakob B Madsen ◽  
Antonio Minniti ◽  
Francesco Venturini
Keyword(s):  
Capital Investment ◽  
Historical Data ◽  
Wealth Inequality ◽  
Growth Effect ◽  
Intangible Capital ◽  
Neoclassical Model ◽  
Schumpeterian Growth ◽  
Long Run ◽  
Tangible Assets ◽  
Income Ratio

Abstract This paper extends the analysis of the wealth–income ratio based on the neoclassical model in a Schumpeterian growth framework in which savings are channelled to both tangible and intangible capital investment. Using historical data for 21 OECD countries over the period 1860–2015, we find that the wealth–income ratio and, hence, wealth inequality, is negatively related to the rate of economic growth and positively related to the rates of investment in intangible and tangible assets, as predicted by the theory. Accounting for the innovation-induced counteracting growth effect on the wealth–income ratio, we show that the net effect of investment in intangibles on wealth inequality is positive. Our estimates suggest that intangibles have been a contributing factor in wealth inequality since 1860 and that the marked increase in the investment in intangible assets in the post–WWII period has been a significant driver of wealth inequality since the 1970s.

Wealth Inequality in the Long Run: A Schumpeterian Growth Perspective

2018 ◽  
Author(s):  
Jakob Madsen ◽  
Antonio Minniti ◽  
Francesco Venturini
Keyword(s):  
Wealth Inequality ◽  
Schumpeterian Growth ◽  
Long Run

scholarly journals Effects of patents on the transition from stagnation to growth

2019 ◽  
Vol 33 (2) ◽  
pp. 395-411 ◽  
Author(s):  
Angus C. Chu ◽  
Zonglai Kou ◽  
Xilin Wang
Keyword(s):  
Economic Growth ◽  
Intellectual Property ◽  
Property Rights ◽  
Population Size ◽  
Intellectual Property Rights ◽  
Growth Model ◽  
Patent Protection ◽  
Theoretic Analysis ◽  
Schumpeterian Growth ◽  
Long Run

Abstract This study provides a growth-theoretic analysis of the effects of intellectual property rights on the take-off of an economy from an era of stagnation to a state of sustained economic growth. We incorporate patent protection into a Schumpeterian growth model in which take-off occurs when the population size crosses an endogenous threshold. We find that strengthening patent protection has contrasting effects on economic growth at different stages of development. Specifically, it leads to an earlier take-off but also reduces economic growth in the long run.

scholarly journals ENDOGENOUS BORROWING CONSTRAINTS AND WEALTH INEQUALITY

2016 ◽  
Vol 20 (6) ◽  
pp. 1413-1431 ◽  
Author(s):  
Joydeep Bhattacharya ◽  
Xue Qiao ◽  
Min Wang
Keyword(s):  
Steady State ◽  
Credit Market ◽  
Wealth Inequality ◽  
Borrowing Constraints ◽  
Initial Distribution ◽  
The Other ◽  
Capital Investments ◽  
Loan Default ◽  
Long Run ◽  
Human Capital Investments

This paper studies the evolution of wealth inequality in an economy with endogenous borrowing constraints. In the model economy, young agents need to borrow to finance human capital investments but cannot commit to repaying their loans. Creditors can punish defaulters by banishing them permanently from the credit market. At equilibrium, loan default is prevented by imposing a borrowing limit tied to the borrower's inheritance. The heterogeneity in inheritances translates into heterogeneity in borrowing limits: endogenously, some borrowers face a zero borrowing limit, and some are partly constrained, whereas others are unconstrained. Depending on the initial distribution of inheritances, it is possible that all lineages are attracted either to the zero-borrowing-limit steady state or to the unconstrained-borrowing steady state—long-run equality. It is also possible that some lineages end up in one steady state and the rest in the other—complete polarization.

scholarly journals General Patterns and Drivers of Changes in Employment Structure: Evidence from Five European Countries

2020 ◽  
Vol 67 (3) ◽  
pp. 333-362
Author(s):  
Larysa Yakymova
Keyword(s):  
Service Sector ◽  
Structural Changes ◽  
National Level ◽  
Active Phase ◽  
Growth Effect ◽  
Causality Test ◽  
Long Run ◽  
Ardl Approach ◽  
Impact Of Urbanization ◽  
The Impact

This paper seeks to answer whether the general patterns and drivers of the sectoral employment shifts depend on a country’s level of development. To accomplish this, we examined employment in Germany, Hungary, Poland, Romania and Ukraine at the national level (1998-2018) using econometric analysis, and at the regional NUTS2 level (2009-2018) using shift-share analysis. We obtained evidence that the general trend is the service sector expansion. Using the ARDL approach and the Granger causality test, we identified long-run unidirectional causality running from income proxies to employment in services in all countries except Romania, where the opposite causality was found. We revealed that household income moderates the impact of urbanization on service sector growth in all countries except Poland. At the regional level, the change in the employment rate in services is explained by the national growth effect and slightly by the industry-mix effect if the active phase of structural changes is completed.

Economic persistence despite adverse policies: Evidence from Kyrgyzstan

2021 ◽  
Author(s):  
Catherine Guirkinger ◽  
Gani Aldashev ◽  
Alisher Aldashev ◽  
Mate Fodor
Keyword(s):  
20Th Century ◽  
Wealth Inequality ◽  
Well Being ◽  
Early 20Th Century ◽  
Material Wealth ◽  
Long Run ◽  
Generational Transmission ◽  
Relative Status ◽  
Geographic Sorting ◽  
Economic Well Being

Abstract We study the long-run persistence of relative economic well-being under adverse government policies using a combination of historical and contemporaneous data from Kyrgyzstan. After controlling for unobservable local effects, the economic well-being of Kyrgyz households in the 2010s correlates with the early 20th-century average wealth of their tribes. Inequality at the tribe level in the 2010s correlates with wealth inequality in the early 20th century. The likely channels of persistence are the inter-generational transmission of human capital, relative status, political power, and cultural traits. Transmission of material wealth, differences in natural endowments, or geographic sorting cannot explain persistence.

scholarly journals Roman wealth and wealth inequality in comparative perspective

2020 ◽  
Vol 33 ◽  
pp. 341-353 ◽  
Author(s):  
Walter Scheidel
Keyword(s):  
Financial Crisis ◽  
Great Recession ◽  
Wealth Inequality ◽  
Barack Obama ◽  
Long Run ◽  
The World ◽  
Small Measure ◽  
The Media ◽  
Looking Back ◽  
Thomas Piketty

In 2013, Barack Obama called rising inequality “the defining challenge of our time”. Since the Financial Crisis and Great Recession of 2007-9, the gap between the haves and have-nots has attracted unprecedented attention in politics, the media and academia.1 Students of the more distant past have also begun to embrace this trend. Economists are once again looking back in time, inspired in no small measure by the broad impact of the work of Thomas Piketty.2 Historians are laboring hard to unearth and publish relevant data. Thanks to their efforts, we are now able to glimpse the contours of changes in the concentration of income and wealth over the very long run, at least in some parts of the world.3 Archaeologists have been joining the fray, gathering and analyzing plausible proxies of inequality such as house sizes.4

scholarly journals MONETARY POLICY AND ENDOGENOUS MARKET STRUCTURE IN A SCHUMPETERIAN ECONOMY

2014 ◽  
Vol 20 (5) ◽  
pp. 1127-1145 ◽  
Author(s):  
Angus C. Chu ◽  
Lei Ji
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Interest Rate ◽  
Market Structure ◽  
Firm Size ◽  
Growth Effect ◽  
Nominal Interest Rate ◽  
Long Run ◽  
Endogenous Market Structure ◽  
Number Of Firms

This study develops a monetary Schumpeterian model with endogenous market structure (EMS) to explore the effects of monetary policy on the number of firms, firm size, economic growth, and social welfare. EMS leads to different results from previous studies in which market structure is exogenous. In the short run, a higher nominal interest rate reduces the growth rates of innovation, output, and consumption and decreases firm size through reduction in labor supply. In the long run, a higher nominal interest rate reduces the equilibrium number of firms but has no steady-state effect on economic growth and firm size because of EMS. Although monetary policy has no long-run growth effect, increasing the nominal interest rate permanently reduces the levels of output, consumption, and employment. Taking transition dynamics into account, we find that welfare is decreasing in the nominal interest rate and the Friedman rule is optimal in this economy.

MODELING OF ENVIRONMENTAL ADAPTATION: AMENITY VERSUS PRODUCTIVITY AND MODERNIZATION

2013 ◽  
Vol 04 (02) ◽  
pp. 1350006 ◽  
Author(s):  
NATALI HRITONENKO ◽  
YURI YATSENKO
Keyword(s):  
Climate Change ◽  
Capital Investment ◽  
Environmental Adaptation ◽  
Negative Consequences ◽  
Adaptation Measures ◽  
Long Run ◽  
Aggregated Model ◽  
Total Productivity ◽  
Adaptation Policies ◽  
Adaptation Investments

We develop an aggregated model to study rational environmental adaptation policies that compensate negative consequences of climate change. The model distinguishes three categories of adaptation measures that (a) compensate the decrease of environmental amenity value, (b) compensate the decrease of total productivity, (c) develop and introduce new hazard-protected capital and technology. We analyze the optimal balance among consumption, capital investment, and different categories of adaptation investments under exogenous climate change. It appears that the climate change damage and subsequent adaptation do not lead to a higher level of capital modernization in the long run as compared to the benchmark case with no climate change. A synergism between productivity-related and amenity-related adaptation activities arises because the productivity-related adaptation positively impacts the economy and creates better possibilities for the amenity adaptation.

scholarly journals The Return of “Patrimonial Capitalism”: A Review of Thomas Piketty's Capital in the Twenty-First Century

2014 ◽  
Vol 52 (2) ◽  
pp. 519-534 ◽  
Author(s):  
Branko Milanovic
Keyword(s):  
Economic Growth ◽  
Historical Data ◽  
First Century ◽  
Data Series ◽  
Unified Theory ◽  
Income Distributions ◽  
Long Run ◽  
Economic Divergence ◽  
Twenty First Century ◽  
Thomas Piketty

Capital in the Twenty-First Century by Thomas Piketty provides a unified theory of the functioning of the capitalist economy by linking theories of economic growth and functional and personal income distributions. It argues, based on the long-run historical data series, that the forces of economic divergence (including rising income inequality) tend to dominate in capitalism. It regards the twentieth century as an exception to this rule and proposes policies that would make capitalism sustainable in the twenty-first century. (JEL D31, D33, E25, N10, N30, P16)

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