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This material has been published in the International Economic Review 38 (1997) 511-526, the only definitive repository of the content that has been certified and accepted after peer review. The web-site of the journal is located at http://www.ssc.upenn.edu/econ/iereview/index.html.

The Growth-Maximizing Distribution of Income

Arthur Robson, Department of Economics, University of Western Ontatio, London, CANADA N6A 5C2

Myrna Wooders, Department of Economics, University of Toronto, Toronto, CANADA M5S 3G7

Abstract

This paper presents an unconventional social selection argument based on historical population growth to bolster marginal productivity theory. Consider an economy with a single output produced according to constant returns to scale from a number of different types of labor. Each type of labor is biologically reproduced according to a constant returns to scale technology from that type itself and from the amount of the output devoted to it. Output is distributed across the input production processes according to some arbitrary income distributional norm. Any norm which fails to induce convergence to maximal balanced growth is ``growth dominated'' in that the population and income it induces can be overwhelmed eventually. On the maximal balanced growth path, the norm divides output over the types of labor according to their marginal products.