Contents

Growing income inequality as a challange to 21st century capitalism / Josef C. Brada ; El-Hadj Bah 1

1. INTRODUCTION 1

2. TRENDS IN FATOR SHARES AND THEIR CAUSES 2

3. EXPLAINING WHY FACTOR SHARES VARY 6

3.1. Technological Change and Changes in Factor Endowments 6

3.2. Globalization 7

3.3. Labor Market Rigidities 9

3.4. Energy Prices 9

3.5. Summary 11

4. DO WE NEED A REINTERPRETATION OF MODERN(MORDERN) GROWTH THEORY? 12

5. THE INCOME DISTRIBUTION AND THE DRIVERS OF TFP GROWTH 13

REFERENCES 19

Appendix A. Countries Used for Estimation of Income Inequality Effects 22