This paper examines, both theoretically and empirically, how initial inequality affects economic growth with particular reference to the subnational states in India, for which no such evidence exists. The theoretical model is characterized by endogenous growth within an OLG set-up, where growth...

A fundamental property of a progressive income tax is that it provides implicit collective insurance against idiosyncratic shocks to income by dampening the variability of disposable income and consumption. The Economic Recovery Tax Act of 1981 (ERTA) and the Tax Reform Act of 1986 (TRA86)...

We analyze answers to household survey questions on whether the respondents' household income has changed in the past twelve months, and on whether the respondents expect their household income to change in the next twelve months. Both questions are answered on a discrete five points scale. The...

In India, about 62 percent of the children in the age group of 5-14 are currently enrolled in schools, and 4 percent of children are reported to be working. The remaining 34 percent of children in this age group are neither enrolled in school nor reported as participating in work. The twin...

No abstract.

We present a model of private production of information in collective decision making. Agents gather costly information, and then aggregate it to produce a collective decision. Because information is a public good, it will be underprovided relative to the social optimum. A ``good'' mechanism...

In an environment in which both workers and firms undertake match specific investments, the presence of market competition for matches may solve the hold-up problems generated by the absence of complete contingent contracts. In particular, this paper shows that when matching is assortative and...

A monopolist selling a durable good cannot extract the whole amount of monopoly rents from consumers each period. This inefficiency is due to the incompleteness of contracts: The monopolist cannot credibly commit not to lower the price in future periods. By using leasing contracts however the...

No abstract.

Studies of early U.S. growth traditionally have emphasized real-sector explanations for an acceleration that by many accounts became detectable between 1815 and 1840. Interestingly, the establishment of the nation's basic financial structure predated by three decades the canals, railroads, and...