Enterprise, Inequality and Economic Development

Posted: 9 Aug 2000

See all articles by Huw Lloyd-Ellis

Huw Lloyd-Ellis

Queen's University - Department of Economics

Dan Bernhardt

University of Illinois at Urbana-Champaign - Department of Economics

Abstract

We characterize an equilibrium development process driven by the interaction of the distribution of wealth with credit constraints and the distribution of entrepreneurial skills. When efficient entrepreneurs are relatively abundant, a "traditional" development process emerges in which the evolution of macroeconomic variables accord with empirical regularities and income inequality traces out a Kuznets curve. If, instead, efficient entrepreneurs are relatively scarce, the model generates long-run "distributional cycles" driven by the endogenous interaction between credit constraints, entrepreneurial efficiency and equilibrium wages.

JEL Classification: O10

Suggested Citation

Lloyd-Ellis, Huw and Bernhardt, Dan, Enterprise, Inequality and Economic Development. Available at SSRN: https://ssrn.com/abstract=234859

Huw Lloyd-Ellis (Contact Author)

Queen's University - Department of Economics ( email )

99 University Avenue
Kingston K7L 3N6, Ontario
Canada K7L 3N6

Dan Bernhardt

University of Illinois at Urbana-Champaign - Department of Economics ( email )

1206 South Sixth Street
Champaign, IL 61820
United States
217-244-5708 (Phone)

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