Two Essays on Income

TWO ESSAYS ON INCOME DISTRIBUTION IN A DEVELOPING ECONOMY by Asim K. Dasgupta Submitted to the Department of Economics on May 12, 1975 in partial fulfillment of the requirements for the degree of Doctor of Philosophy. This thesis is a collection of two essays.on the relationship between the distribution of income and the behavior of some crucial macro-variables in a developing economy. The first essay purports to analyze, with reference to such an economy, the interaction between the distribution of income, education and the accumulation of capital. Given the distribution of income between different groups at any point of time and their accumulation functions of education and physical capital, it is shown how the incomes of these groups are determined at the next point of time through the interaction between education and physical capital, and therefore how the distribution of income changes over time. An analytical framework is constructed and on the basis of that a policy model developed. The crucial relationships of this model are estimable and these estimations have been made for two less developed countries, India and Colombia, to judge the egalitarian or non-egalitarian character of government policies in these countries over some specific periods of time. The second essay is concerned with the interrelation between the distribution of income, the structure of markets, particularly of the credit market, and the problem of capital accumulation in a developing economy. The central idea is developed within the agricultural sector of such an economy, and then it is pointed out how this can be extended to cover the industrial sector as well. A model is built by taking into account the dualism that exists in such agriculture between the family and the capitalist farm*, the distribution of income between these farms, the implication of that distribution on the structure of credit market and the decisions that these farms have to take on the use of inputs and the allocation of wealth under these circumstances. This model is then used to analyze the special problem of capital accumulation of this agriculture. It is found that given an unequal