In an overlapping generations model, rents to human capital play a key role in increasing savings. In the absence of such rents, the return to human capital is entirely appropriated by the old and accumulation is entirely determined by the income to fixed factors. If rents are introduced by...

This paper explores the implications of Unified Growth Theory for the origins of existing differences in income per capita across countries. The theory sheds light on three fundamental layers of comparative development. It identifies the factors that have governed the pace of the transition from...

This paper presents a unified theory that provides an intertemporal reconciliation between conflicting viewpoints about the effect of inequality on economic growth. It argues that the replacement of physical capital accumulation by human capital accumulation as a prime engine of economic growth...

This paper examines how economic stratification affects inequality and growth over time. It studies economies where heterogenous agents interact through local public goods or externalities (school funding, neighbourhood effects) and economy-wide linkages (complementary skills, knowledge...

The changes in economic policy introduced in the UK after 1979 had a substantial impact on income distribution, unemployment and productivity growth. This paper brings together available evidence in an attempt to evaluate the welfare effects of the Thatcher reforms. The estimated impact turns...

The empirical literature on the relationship between inequality and growth offers a contradictory assessment: Estimators based on time-series (differences-based) variation indicate a strong positive link while estimators (also) exploiting the cross-sectional (levelbased) variation suggest a...

This paper first draws on a unique data set, hojok (household registers), to estimate numeracy levels in Korea from the period 1550–1630. We add evidence from Japan and China from the early modern period until 1800 to obtain a human capital estimate for East Asia. We find that numeracy was...

This paper analyses the impact of inequality on growth when technical progress is driven by innovations. It is assumed that consumers have hierarchic preferences. As a result inequality affects demand and therefore the incentive to innovate. Whether more inequality is harmful or beneficial for...

During the nineteenth century, most Western societies extended voting rights, a decision that led to unprecedented redistributive programs. We argue that these political reforms can be viewed as strategic decisions by political elites to prevent widespread social unrest and revolution. Political...

This paper studies the impact of income inequality on the level of innovative activity in a model where innovations result in quality improvements. The market for quality goods is characterized by a natural oligopoly with two types of consumers – rich and poor. In general, we find that for...