Enterprise, inequality and economic development

Huw Lloyd-Ellis, Dan Bernhardt

Research output: Contribution to journalArticlepeer-review


We characterize an equilibrium development process driven by the interaction of the distribution of wealth with credit constraints and the distribution of entrepreneurial skills. When efficient entrepreneurs are relatively abundant, a 'traditional' development process emerges in which the evolution of macroeconomic variables accord with empirical regularities and income inequality traces out a Kuznets curve. If, instead, efficient entrepreneurs are relatively scarce, the model generates long-run 'distributional cycles' driven by the endogenous interaction between credit constraints, entrepreneurial efficiency and equilibrium wages.

Original languageEnglish (US)
Pages (from-to)147-168
Number of pages22
JournalReview of Economic Studies
Issue number1
StatePublished - 2000

ASJC Scopus subject areas

  • Economics and Econometrics


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