Income Inequality and Economic Growth: An Analysis Using a Panel Data

Mohamed Bouincha and Mohamed Karim

International Journal of Economics and Finance, 2018, vol. 10, issue 5, 242-253

Abstract: A long time ago, economic growth was the main indicator of countries¡¯ economic health. However, since the 1970s, the analysis of the relationship between economic growth and other economic phenomena such as inequality has begun to grow (Sundrum, 1974). Much of the literature on the link between economic growth and income inequality is based on Kuznets revolutionary theory. The purpose of our article is to suspect the causality relationship between growth and inequality. To do this, we used data from 189 countries for the period between 1990 and 2015. We estimated a global model and three other of each category of countries in terms of development. In the global model, economic growth is insignificant even if its sign is positive. The same result appears in the developing country model and the moderately developed countries one. However, in the developed countries model, economic growth is negatively and statistically related to inequality. The Kuznets curve is approved in our study only when using human development indicator in the place of growth. Growth explain inequality¡¯s movement in our study only in the model of developed countries and its coefficient is negative.

Keywords: growth; inequality; GINI; panel data; human development indicator; GDP per capita (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:ibn:ijefaa:v:10:y:2018:i:5:p:242-253

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