This paper develops a two-sector R&D-based growth model with congestion effects from increasing urban population density. We show that endogenous technological progress causes structural change if there are positive productivity spillovers from the modern to the traditional sector and Engel's...

According to a standard argument, higher income inequality fosters redistributive activities of the government in favor of the median income earner. This paper shows that if redistribution is achieved by a public provision of goods and services rather than by transfers, higher income inequality...

R&D-based growth theory suggests that a larger population size raises either the long-run rate of economic growth (strong scale effect) or the level of per capita income (weak scale effect), with far-reaching policy implications. However, for modern times there is little empirical support for...

R&D-based growth theory suggests that a larger population size raises either the long-run rate of economic growth (strong scale effect) or the level of per capita income (weak scale effect), with far-reaching policy implications. However, for modern times there is little empirical support for...

The optimal mix of growth policies is derived within a comprehensive endogenous growth model. The analysis captures important elements of the tax-transfer system and takes into account transitional dynamics. Currently, for calculating corporate taxable income US firms are allowed to deduct...