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| Author: | Mani, A. |
| Title: | Income distribution and the demand constraint |
| Journal: | Journal of Economic Growth
2001 : JUN, VOL. 6:2, p. 107-133 |
| Index terms: | Inequality Preferences |
| Language: | eng |
| Abstract: | This pape argues that the interaction between inequality and the demand patterns for goods is a potential source of persistent inequality. Income distribution, in the presence of non-homethetic preferences, affects the demand for goods and, due to differences in factor intensities across sectors, it alters the return to factors of production and the initial distribution of income. Low inequality leads to high demand for medium skilled intensive goods, providing a bridge over which low skill dynasties may transition to the high-skilled sector in the long run. |
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