The Shape of the Income Distribution and Economic Growth: Evidence from Swedish Labor Market Regions

Dan-Olof Rooth and Anders Stenberg

No 5486, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We analyze the association between inequality and growth across 72 labor market regions in Sweden 1990-2006. Highly accurate measures of growth and inequality (gini, Q3, p9075, p5010) are derived from population register data. The regional set-up also reduces problems with omitted variable bias and endogeneity found in cross country comparisons since the regions within a country share the same redistributive policies and institutions. The findings suggest that inequality between the 90th and 75th percentiles enhances regional growth. This result no longer holds when we take into account changes in commuting patterns. Although only suggestive, the finding is interesting in that it is consistent with the hypothesis that inequality enhances growth by stimulating commuting incentives.

Keywords: gini; income distribution; growth; inequality (search for similar items in EconPapers)
JEL-codes: D3 J6 O4 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2011-02
New Economics Papers: this item is included in nep-fdg, nep-geo, nep-lab, nep-ltv and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - published in: Scottish Journal of Political Economy, 2012, 59 (2), 196-223

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Journal Article: The Shape of the Income Distribution and Economic Growth – Evidence from Swedish Labor Market Regions (2012)
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