A Schumpeterian Model of Top Income Inequality
By Charles I. Jones, Jihee Kim. Journal of Political Economy, 2014
238 citations recorded by the source corpus.
Top income inequality rose sharply in the United States over the last 40 years but increased only slightly in France and Japan. Why? We explore a model in which heterogeneous entrepreneurs, broadly interpreted, exert effort to generate exponential growth in their incomes, which tends to raise inequality. Creative destruction by outside innovators restrains this expansion and induces top incomes to obey a Pareto distribution. Economic forces that affect these two mechanisms—including information technology, taxes, and policies related to innovation blocking—may explain the varied patterns of top income inequality that we see in the data.
Subfields: Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/4568c1601e5538c6ee9e3b7fbe3dd17ad2bbfa24
How researchers see this paper
The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.
In Economics and Econometrics
- Ufuk Akcigit
- Philippe Aghion
- Michael Peters
- David Hémous
- Richard Blundell
- Antonin Bergeaud
- Salomé Baslandze
- F. Lotti
Citations in the corpus
- Technology, Vintage-Specific Human Capital, and Labor Displacement: Evidence from Linking Patents with Occupations∗ (2022, methodology): “Our formulation for θ is related to Jones and Kim (2018) in that the skill of an individual worker grows on average over time but occasionally resets to a lower level.”
- Heterogeneous Markups, Growth, and Endogenous Misallocation (2020, result): “Jones and Kim (2016)”
- Connecting to Power: Political Connections, Innovation, and Firm Dynamics (2018, background): “…Grossman and Helpman, 1991; Klette and Kortum, 2004; Lentz and Mortensen, 2008; Aghion et al., 2014; Acemoglu et al., 2018; Akcigit and Kerr, 2018; Jones and Kim, 2018, among many others).4 Likewise, a growing body of empirical literature shows that creative destruction and factor reallocation…”
- The Rise of American Ingenuity: Innovation and Inventors of the Golden Age (2017, unknown): “By contrast Jones and Kim (2014) shows theoretically that 46 Notes: Table presents estimated coefficients from a regression of log wages on innovation measures.”
- Innovation and Top Income Inequality (2018, background): “Krusell et al. (2000) relate the increase in the skill premium with the increase in the equipment stock.”