The relationship between economic growth and inequality: evidence from the age of market liberalism

Gerardo Angeles-Castro

DEGIT Conference Papers from DEGIT, Dynamics, Economic Growth, and International Trade

Abstract: Using a panel data set of countries this paper shows that the inequality-growth relationship follows an ordinary-U curve during the period 1970-98, in which inequality first decreases and then increases with economic growth. In addition, there is some evidence that the increasing pattern may reverse at higher levels of income. A time-series approach shows that a substantial group of countries capture a minimum turning point in different years along the period and others follow a permanent positive trend. It also indicates that only a few countries reverse inequality in a latter stage and display a maximum turning point after the mid 1990s; these countries are associated with macroeconomic stability, high governance and moderate expansion of trade and FDI. Hence, the inequality-growth relationship during the era of market openness has tended to change towards a positive one, although it might reverse at a later stage.

Keywords: Income Distribution; Economic Growth; Dynamic Panel Data Models; Time-Series Analysis (search for similar items in EconPapers)
JEL-codes: C22 C23 F01 O15 O57 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2006-06
New Economics Papers: this item is included in nep-dev
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:deg:conpap:c011_009

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