The inequality–growth plateau

Daniel Henderson (), Junhui Qian and Le Wang

Economics Letters, 2015, vol. 128, issue C, 17-20

Abstract: We examine the (potentially nonlinear) relationship between inequality and growth using a method which does not require an a priori assumption on the underlying functional form. This approach reveals a plateau completely missed by commonly used (nonlinear) parametric approaches—the economy first expands rapidly with a large decline in inequality, plateaus when inequality remains relatively stable, and then decreases rapidly with a large increase in inequality. This novel finding helps reconcile the conflicting results in the literature (using different parametric assumptions and datasets) and has important policy implications.

Keywords: Inequality; Growth; Panel data; Semiparametric (search for similar items in EconPapers)
JEL-codes: C14 C5 O4 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (14)

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Related works:
Working Paper: The Inequality-Growth Plateau (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:128:y:2015:i:c:p:17-20

DOI: 10.1016/j.econlet.2015.01.001

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