Schumpeterian Entrepreneurs Meet Engel's Law: The Impact of Inequality on Innovation-Driven Growth
Josef Zweimüller
University of Zurich - Department of Economics Library; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Institute for the Study of Labor (IZA)
May 1998
Abstract:
This paper analyzes 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 growth depends on the initial distribution. Complementarities between a technical and a pecuniary externality resulting from the innovation process may generate multiple equilibria. Redistribution may push an economy trapped in underdevelopment to a high-growth regime.
Number of Pages in PDF File: 45
JEL Classification: H23, O14, O15, O31
working papers series
Suggested Citation
Zweimüller, Josef, Schumpeterian Entrepreneurs Meet Engel's Law: The Impact of Inequality on Innovation-Driven Growth (May 1998). Available at SSRN: http://ssrn.com/abstract=125288 or http://dx.doi.org/10.2139/ssrn.125288
