Income Inequality, TFP, and Human Capital

23 Pages Posted: 9 Mar 2017

See all articles by Tiago Neves Sequeira

Tiago Neves Sequeira

University of the Interior of Beira - Faculty of Social Sciences and Humanities; New University of Lisbon - Faculdade de Economia

Alexandra Ferreira Lopes

Instituto Superior de Ciências do Trabalho e da Empresa (ISCTE)

Date Written: March 2017

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.

Suggested Citation

Neves Sequeira, Tiago and Lopes, Alexandra Ferreira, Income Inequality, TFP, and Human Capital (March 2017). Economic Record, Vol. 93, Issue 300, pp. 89-111, 2017, Available at SSRN: https://ssrn.com/abstract=2929326 or http://dx.doi.org/10.1111/1475-4932.12316

Tiago Neves Sequeira (Contact Author)

University of the Interior of Beira - Faculty of Social Sciences and Humanities ( email )

6200-209 Covilha
Portugal

New University of Lisbon - Faculdade de Economia ( email )

Campus de Campolide
Lisboa, 1099-032
Portugal

Alexandra Ferreira Lopes

Instituto Superior de Ciências do Trabalho e da Empresa (ISCTE) ( email )

Complexo Indeg/Iscte
Av. Professor Anibal Bettencourt
Lisboa, 1600-189
Portugal

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