Chapter 5 Income Distribution and Growth
gcording to Ricardo, theory of income distribution is to determine wages in the labor market, rent in the land market, rate of interest in the capital market, factors in production, economic structure and wealth accumulation. Okun observed a trade-off between equality and efficiency in 1975:1 'The contrasts among American families in living standards and in material wealth reflect a system of rewards and penalties that is intended to encourage effort and channel it into socially productive activity. To the extent that the system succeeds, it generates an efficient economy. But that pursuit of efficiency necessarily creates inequalities. And hence society faces a tradeoff between equality and efficiency. ...
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