Does Income Inequality Matter for Structural Transformation?

Deming Luo and Kai Qu

Applied Economics Letters, 2023, vol. 30, issue 21, 3026-3033

Abstract: This study revisits the effect of income inequality on economic development from the perspective of structural change. Using an international panel dataset of 90 economies from 1996 to 2015, we empirically assess the impact of income inequality on labour transformation across sectors. We use the ‘wheat – sugar ratio’ as an instrument for endogenous variation. The results suggest that income inequality positively and significantly impacts agricultural labour.

Date: 2023
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DOI: 10.1080/13504851.2022.2118220

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