Is Income Inequality Endogenous in Regional Growth?

Yohannes Hailu, Mulugeta Kahsai (), Tesfa Gebremedhin () and Randall Jackson ()
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Yohannes Hailu: Land Policy Institute, Michigan State University
Mulugeta Kahsai: Department of Technology, Virginia State University
Tesfa Gebremedhin: Division of Resource Management, West Virginia University

Working Papers from Regional Research Institute, West Virginia University

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. Based on a system of equations estimation, the empirical results 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 to the extent that: (1) that income inequality is endogenous, its equilibrium level can be internally determined within a regional growth process; (2) traditional income inequality mitigating policies have indirect effect on overall regional growth, they may have unintended indirect effects on income inequality; and (3) 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: income inequality; economic growth; Gini coefficient; growth modeling; population change; per capita income (search for similar items in EconPapers)
JEL-codes: E01 R11 R58 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2009-01-31
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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:rri:wpaper:2009wp01

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