Growth, inequality and poverty: a robust relationship?

Gustavo Marrero and Luis Servén

Empirical Economics, 2022, vol. 63, issue 2, No 8, 725-791

Abstract: Abstract The consequences of poverty and inequality for growth have long preoccupied academics and policy-makers. This paper revisits the inequality-growth and poverty-growth links. Using a panel of 158 countries between 1960 and 2010, we find that the correlation of growth with poverty is consistently negative: A 10 p.p. decrease in the headcount poverty rate is associated with a subsequent increase in per capita GDP between 0.5 and 1.2% per year. In contrast, the correlation of growth with inequality is empirically fragile—it can be positive or negative, depending on the empirical specification and econometric approach employed. However, the indirect effect of inequality on growth through its correlation with poverty is robustly negative. Closer inspection shows that these results are driven by the sample observations featuring high poverty rates.

Keywords: Growth; Inequality; Poverty; Indirect impacts (search for similar items in EconPapers)
JEL-codes: E25 O11 O15 O40 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (9)

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Working Paper: Growth, inequality and poverty: A robust relationship? (2018)
Working Paper: Growth, Inequality, and Poverty: A Robust Relationship? (2018)
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DOI: 10.1007/s00181-021-02152-x

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