Income Inequality and Growth: New Insights from Italy

Bernard Njindan Iyke and Sin-Yu Ho

MPRA Paper from University Library of Munich, Germany

Abstract: This paper investigates the impact of income inequality on economic growth in Italy during the period of 1967 to 2012. Specifically, using a technique that allows us to sort out long-run impacts from short-run impacts, we investigate whether income inequality benefits or harms growth, after controlling for human capital, labour, physical capital and inflation within an augmented growth model. Amid the existing debatable theoretical and empirical studies, our results suggest that income inequality has a negative and significant impact on growth in the long run. The negative impact of income inequality on growth still exist in the short run. However, the coefficient becomes insignificant. Overall, we gather that inequality hurts growth in the country. Based on this finding, we provide some policy implications.

Keywords: Income inequality; Economic Growth; Italy. (search for similar items in EconPapers)
JEL-codes: D63 O15 O47 O52 (search for similar items in EconPapers)
Date: 2017-03
New Economics Papers: this item is included in nep-gro
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Citations: View citations in EconPapers (9)

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Journal Article: Income Inequality and Growth: New Insights from Italy (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:78268

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