Inequality and growth in the United States: is there asymmetric response at the state level?

Mohsen Bahmani-Oskooee and Amid Motavallizadeh-Ardakani

Applied Economics, 2018, vol. 50, issue 10, 1074-1092

Abstract: A previous study that tried to assess the impact of economic growth on income inequality in the U.S. used state-level data and an ARDL panel model to conclude that economic growth worsens income inequality in the U.S. In this article, we use the same data set but an ARDL time-series model applied to each state in the U.S. to show that the above conclusion is only valid in 20 states. Additionally, we use a nonlinear ARDL approach to show that the effects are asymmetric in the short run as well as in the long run. Significant long-run asymmetric effects reveal that in 28 states both an increase and a decrease in real output have worsened income distribution.

Date: 2018
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DOI: 10.1080/00036846.2017.1349293

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