Roland J. Benabou New York University SBR-9601319 This research seeks to explain the following set of facts with one economic model: 1) countries vary widely in their redistributive policies, 2) higher levels of income inequality are associated with lower subsequent growth rates, 3) there is no relationship between inequality and the share of transfers in GDP and 4) transfers appear to be positively associated with subsequent growth. The emphasis of the research will be primarily theoretical, as opposed to empirical. It will seek to explain the above set of facts without making overly restrictive assumptions about individuals' behavior. The principal investigator will also look at technology adoption as a response to heterogeneity in workers' skills, the hypothesis being that heterogeneity in workers' skills leads to heterogeneity in technologies and increased wage inequality.
