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The Galor-Zeira model describes the inequality-education-growth relationship, explained by the mechanism of unequal access to education due to imperfect capital markets. It claims that this mechanism might lead to a negative effect of inequality on growth. The initial distribution of income determines whether an economy will converge to a low- or high-income regime, as there are multiple steady states in the model. The model was developed by Oded Galor and Joseph Zeira in 1988, and it was published in the paper “Income Distribution and Macroeconomics”, 1993. The Neoclassical viewpoint has been challenged in the past two decades, as both theories and subsequent empirical evidence have demonstrated that income distribution has a significant impact on the growth process. In contrast to the representative agent approach which dominated the field of macroeconomics for several decades, the modern perspective, originated by Galor and Zeira (1988, 1993), has underlined the role of heterogeneity in the determination of macroeconomic activity. It has advanced a novel viewpoint that heterogeneity, and thus income distribution, plays an important role in the determination of aggregate economic activity and economic growth in the short-run as well as in the long-run. Galor and Zeira have demonstrated that in the presence of credit market imperfections, income distribution has a long-lasting effect on investment in human capital, aggregate income, and economic development. Moreover, in contrast to the classical hypothesis, which underscored the virtues of inequality for economic growth, their research advanced the hypothesis that inequality may be detrimental for human capital formation and economic development. ==Dynamics of the model== The model consists of four assumptions:〔 * A good can be produced by either a skilled or unskilled process and skilled workers are more productive. * Individuals live for two periods and each has one offspring. * In the first period, individuals either invest in human capital and acquire education or work as an unskilled worker. In the second period, they work as skilled or unskilled, according to their decision made in the first period. The decision to invest in education depends on the inheritance from the parent. * There are imperfect capital markets: due to the need to monitor borrowers, which increases costs, the borrowing interest rate is higher than the lending rate. There are three possible individual scenarios in the model: * The individual inherits a higher amount than the cost of education and will invest in human capital. The individual becomes a lender. * The individual inherits a lower amount than the cost of education, but finds it profitable to borrow money to invest in human capital. The individual becomes a borrower. * The individual inherits a much lower amount than the cost of education and finds it unprofitable to invest in human capital, due to higher costs of borrowing. As a result, education is limited to individuals with sufficiently high initial wealth. If credit markets were perfect, every individual would be able to borrow money to invest in human capital. 抄文引用元・出典: フリー百科事典『 ウィキペディア（Wikipedia）』 ■ウィキペディアで「Galor-Zeira model」の詳細全文を読む スポンサード リンク
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