Income Inequality, TFP, and Human Capital†
We gratefully acknowledge financial support from FCT ‐ Fundação para a Ciência e a Tecnologia (Science and Technology Foundation), through project PTDC/EGE‐ECO/112499/2009 and from FCT and FEDER/COMPETE, through grants UID/ECO/04007/2013 and UID/GES/00315. We are grateful to comments from participants in the CEFAGE workshop and in the 15th Eurasian Business and Economics Society Conference. The remaining errors are ours alone. Some of the results are described in the text but that are not shown for space considerations. These results are available upon request to the corresponding author.
Abstract
A fruitful recent theoretical literature has related human capital and technological development to income (and wage) inequality. However, empirical assessments on the relationship are relatively scarce. We relate human capital, total factor productivity (TFP) and openness to inequality and discover that, when countries are assumed to be heterogeneous and dependent cross‐sections, human capital is the most robust determinant of inequality, contributing to increasing inequality, as predicted by theory. TFP and openness turned out to be non‐significantly related to inequality. These results are robust to a number of robustness tests on specifications and data and open up the prospect of theoretical research on the country‐specific features conditioning the effect of human capital, technology and trade on inequality.
Citing Literature
Number of times cited according to CrossRef: 3
- Delphin Kamanda Espoir, Nicholas Ngepah, The effects of inequality on total factor productivity across districts in South Africa: a spatial econometric analysis, GeoJournal, 10.1007/s10708-020-10215-2, (2020).
- Jakub Bartak, Łukasz Jabłoński, Inequality and growth: What comes from the different inequality measures?, Bulletin of Economic Research, 10.1111/boer.12220, 72, 2, (185-212), (2019).
- Manuela Magalhães, Tiago Sequeira, Óscar Afonso, Industry Concentration and Wage Inequality: a Directed Technical Change Approach, Open Economies Review, 10.1007/s11079-018-9513-0, (2018).
