2003/08/01 by David de la Croix, Matthias Doepke · 5 citations
Economics, Econometrics and Finance · Social Sciences · #Economic Growth and Productivity #Fiscal Policy and Economic Growth #Income, Poverty, and Inequality
paper · doi:10.1257/000282803769206214
openalex publication_date 2003/08/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/22
We develop a new theoretical link between inequality and growth. In our model, fertility and education decisions are interdependent. Poor parents decide to have many children and invest little in education. A mean-preserving spread in the income distribution increases the fertility differential between the rich and the poor, which implies that more weight gets placed on families who provide little education. Consequently, an increase in inequality lowers average education and, therefore, growth. We find that this fertility-differential effect accounts for most of the empirical relationship between inequality and growth.