The Evolution of Income and Fertility Inequalities Over the Course of Economic Development: A Human Capital Perspective

Abstract

Using an endogenous-growth, overlapping-generations framework where human capital is the engine of growth, we trace the dynamic evolution of income and fertility distributions and their interdependencies over three endogenous phases of economic development. In our model, heterogeneous families determine fertility and children's human capital, and generations are linked via parental altruism and social interactions. We derive and test discriminating propositions concerning the dynamic behavior of inequalities in fertility, educational attainments, and three endogenous income inequality measures -- family-income inequality, income-group inequality, and the Gini coefficient. In this context, we also reexamine the "Kuznets hypothesis" concerning the relation between income growth and inequality.