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.

We propose a summary statistic for the economic well-being of people in a country. Our measure incorporates consumption, leisure, mortality, and inequality, first for a narrow set of countries using detailed micro data, and then more broadly using multi-country datasets. While welfare is highly correlated with GDP per capita, deviations are often large. Western Europe looks considerably closer to the United States, emerging Asia has not caught up as much, and many developing countries are further behind. Each component we introduce plays a significant role in accounting for these differences, with mortality being most important.

This paper examines the role of sectors in aggregate convergence for 14 OECD countries during 1970-1987. The major finding is that manufacturing shows little evidence of either labor productivity or multifactor productivity convergence, while other sectors, especially services, are driving the aggregate convergence result. To determine the robustness of the convergence results, the paper introduces a new measure of multifactor productivity which avoids many problems inherent to traditional measures of total factor productivity when comparing productivity levels. The lack of convergence in manufacturing is robust to the method of calculating multifactor productivity.

This note revisits the proof of the steady-state growth theorem, first given by Uzawa in 1961.We provide a clear statement of the theorem, discuss intuition for why it holds, and present a new, elegant proof due to Schlicht (2006).

In this paper, we test whether aggregate productivity movements, especially convergence, are also reflected at the industry level.Using a new result on the asymptotic normality of panel unit root estimators, we find evidence for convergence in total factor productivity for sectors such as services and construction in 14 OECD countries from 1970-1987.However, surprisingly, we find that convergence does not hold for the manufacturing sector.Convergence in total industry occurs as a result of the declining share of manufacturing and the growing share of sevices in these countries.

Modern growth theory suggests that more than three-quarters of growth since 1950 reflects rising educational attainment and research intensity. As these transition dynamics fade, US economic growth is likely to slow at some point. However, the rise of China, India, and other emerging economies may allow another few decades of rapid growth in world researchers. Finally, and more speculatively, the shape of the idea production function introduces a fundamental uncertainty into the future of growth. For example, the possibility that artificial intelligence will allow machines to replace workers to some extent could lead to higher growth in the future.

Comparing Apples to Oranges: Productivity Convergence and Measurement across Industries and Countries: Reply by Andrew B. Bernard and Charles I. Jones. Published in volume 91, issue 4, pages 1168-1169 of American Economic Review, September 2001

January 1997, Version 1.01 Prepared for the American Economic Review Papers and Proceedings , May 1997. See also "The Productivity of Nations"

In 1960, 94 percent of doctors and lawyers were white men. By 2010, the fraction was just 62 percent. Similar changes in other highly‐skilled occupations have occurred throughout the U.S. economy during the last 50 years. Given that the innate talent for these professions is unlikely to have changed differently across groups, the change in the occupational distribution since 1960 suggests that a substantial pool of innately talented women and black men in 1960 were not pursuing their comparative advantage. We examine the effect on aggregate productivity of the convergence in the occupational distribution between 1960 and 2010 through the prism of a Roy model. Across our various specifications, between 20% and 40% of growth in aggregate market output per person can be explained by the improved allocation of talent.