Income inequality and economic growth in Asian countries

Oscar Claveria

No 202502, AQR Working Papers from University of Barcelona, Regional Quantitative Analysis Group

Abstract: This study examines income inequality across 53 Asian countries from 1990 to 2021, focusing on the application of the Kuznets’ curve theory. This hypothesis states an inverted U-shaped relationship exists between economic growth and inequality, suggesting an initial increase followed by a decline in income disparity as GDP per capita growth. We analyzed data accruing the share of income of the Top 1% income holders of each country, by regions and for the continent as a whole. We employed a fixed-effects panel model with GDP per capita, squared GDP per capita and cubed GDP per capita as explanatory variables. Our results include mixed evidence of the completion of the curve: Asia overall supports the Kuznets’ curve however the regional analysis reveal differences. While East and South Asia present with significant U-shaped relationship patterns, Central Asia shows an inverted N-shaped relationship. Referencing to West and Southeast Asia, they demonstrate similar U-shaped trends however not statistically significant. This research contributes by offering region-specific insights into inequality dynamics relating to economic growth to provide policymakers with tools to target interventions for inclusive development across Asian countries.

Keywords: : income inequality; economic growth; Kuznets’ curve hypothesis; economic uncertainty; Asia JEL classification: C50; D31; E64; O53 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2025-03, Revised 2025-03
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Persistent link: https://EconPapers.repec.org/RePEc:aqr:wpaper:202502

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