Template-type: ReDif-Paper 1.0 
Author-Name: Jun, Bogang
Author-Email: bjun@mit.edu
Author-workplace-name: Massachusetts Institute of Technology, The MIT Media Lab
Author-Name: Kaltenberg, Mary
Author-Email: kaltenberg@merit.unu.edu
Author-workplace-name: UNU-MERIT, Maastricht University, and Massachusetts Institute
	 of Technology, The MIT Media Lab
Author-Name: Hwang, Won-sik
Author-Email: yel0sik@snu.ac.kr
Author-workplace-name: Korea Institute for Industrial Economics and Trade
Title: How inequality hurts growth: Revisiting the Galor-Zeira model through a Korean 
	 case
Abstract: This paper aims to show that the level of inequality increases via the 
	 human capital channel with credit market imperfections generating 
	 negative effects on economic growth. We expand the model presented by 
	 Galor and Zeira (1993) to represent the fact that the economy benefits 
	 from endogenous technological progress and that the government provides 
	 financial aid to reduce the financial hurdles for human capital 
	 accumulation. We use Korean data from 1998 to 2008 to empirically 
	 confirm that education plays a significant role in the divergence of 
	 household wealth over time and that the government's financial aid 
	 package in the form of the new student loans programme positively 
	 influences equality and short-run economic growth by promoting the 
	 number of skilled workers.
Keywords: Human Capital, Economic Growth, Inequality, South Korea
Classification-JEL: I24, I25, O15
Series: UNU-MERIT Working Papers
Creation-Date: 20170811
Number: 2017-034
File-URL: https://unu-merit.nl/publications/wppdf/2017/wp2017-034.pdf
File-Format: application/pdf
File-Size: 275 kb
Handle: RePEc:unm:unumer:2017034