Distribution and growth: a review of the recent literature

We summarize the main contributions made by the endogenous growth literature on the distribution and growth interaction. We review the main determinants of this interaction in recent empirical research and we contrast them with the historial experience of developed and emerging countries. We find, firstly, that most evidence does not provide support for the known Kuznets hypothesis about an inverted U relation between economic growth and income distribution; secondly, there is no sistematic relation between these variables; thirdly, that initial inequality is associated with low rythms of economic growth; and finally, that in the case of Latin America inequality has become an obstacle to economic growth.