Economists have long sought to maximise economic growth, believing this to be their best contribution to improving human welfare. That approach is not sustainable in the face of ongoing issues such as global climate change, environmental damage, rising inequality and enduring poverty....

We analyse the impact of human capital misallocation and redistribution on GDP, welfare, and TFP, in economies with financial market imperfections. We present an overlapping generations model in which the innate abilities of children are drawn from a probability distribution and where parents...