Fostering Inclusive Growth Philippe Aghion Schumpeterian growth - - PowerPoint PPT Presentation

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Fostering Inclusive Growth Philippe Aghion Schumpeterian growth - - PowerPoint PPT Presentation

Apr 17, 2023 119 likes •468 views

Fostering Inclusive Growth Philippe Aghion Schumpeterian growth theory Long-run growth driven by innovations Innovations result from entrepreneurial activities motivated by prospect of innovation rents Creative destruction: new

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Fostering Inclusive Growth

Philippe Aghion

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Schumpeterian growth theory

  • Long-run growth driven by innovations
  • Innovations result from entrepreneurial activities

motivated by prospect of innovation rents

  • Creative destruction: new innovations displace
  • ld technologies
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Preliminary idea

  • Different measures of inequality which must be

looked at differently

– Top income inequality, “Gini”, social mobility

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Cross-Sectional Income Inequality and Inter- generational mobility

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Challenge

– Can we make innovation-led growth more inclusive and how?

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Not so obvious…

  • Innovations generate rents from new products or

processes…and it is precisely the prospect of such rents which motivates innovation investments

  • Mr Skype is currently among the richest in

Sweden…he was unknown 20 years ago…

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By contrast, lobbying…

  • Increases top income inequality
  • Increases inequality at large
  • Reduces social mobility
  • Steve Jobs versus Carlos Slim
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The tale of two EU countries

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Taking stock

  • Some countries have managed to make

innovation-led growth inclusive

  • Overtaxing capital income is not the way to go
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Promoting inclusive growth

  • Look at main drivers of innovation-based growth

– Education – Product market competition – Labor market dynamism

  • Each of these enhance social mobility
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Enhancing social mobility: schooling

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35 40 45 50 55 30 40 50 60 70

Upward Mobility (Y 25 ) Mean School Percentile Rank (Based on Grade 3-8 Reading and Math) (0.087) ρ = 0.589

Factor #3: Upward Mobility vs. Test Scores

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Enhancing social mobility: competition

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Enhancing social mobility: Flexsecurity on labor market

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Conclusion

  • Thus there is hope for generating more

inclusive growth

  • Way to go: enhance social mobility

– Education – Competition – Flexsecurity