Is Income Inequality Endogenous in Regional Growth?

Yohannes G. Hailu, Mulugeta S. Kahsai, Tesfa G. Gebremedhin and Randall Jackson ()

No 46320, 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia from Southern Agricultural Economics Association

Abstract: This study focuses on testing the relationship between income inequality and growth within U.S. counties, and the channels through which such effects are observed. The study tests three hypotheses: (1) income inequality has an inverse relationship with growth; (2) regional growth adjustments are the channels through which the inequality and growth are equilibrated; and (3) income inequality is endogenous to regional growth and its adjustment. Results, based on a system of equations estimation, confirm the hypotheses that income inequality has a growth dampening effect; income inequality is endogenous to regional growth and growth adjustment; and the channels through which income inequality determines growth are regional growth adjustments, such as migration and regional adjustment in job and income growth. Results have numerous policy implications: (1) to the extent that income inequality is endogenous, its equilibrium level can be internally determined within a regional growth process; (2) to the extent that traditional income inequality mitigating policies have indirect effect on overall regional growth, they may have unintended indirect effects on income inequality; and (3) to the extent that regional growth adjustment also equilibrates income inequality, such forces can be utilized as policy instruments to mitigate income inequality, and its growth dampening effects hence forth.

Keywords: Community/Rural/Urban Development; Public Economics (search for similar items in EconPapers)
Pages: 20
Date: 2009
New Economics Papers: this item is included in nep-fdg and nep-geo
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Related works:
Journal Article: Is Income Inequality Endogenous In Regional Growth? (2011)
Working Paper: Is Income Inequality Endogenous in Regional Growth? (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:saeana:46320

DOI: 10.22004/ag.econ.46320

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