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In search of thresholds in the household income inequality–growth relationship
Author(s) -
Paleologou SuzannaMaria
Publication year - 2019
Publication title -
economics of transition and institutional change
Language(s) - English
Resource type - Journals
eISSN - 2577-6983
pISSN - 2577-6975
DOI - 10.1111/ecot.12228
Subject(s) - endogeneity , economics , inequality , economic inequality , econometrics , threshold model , panel data , income inequality metrics , income distribution , demographic economics , mathematics , mathematical analysis
This paper investigates the shape of the relationship between household income inequality and economic growth. More precisely we search for the existence of threshold values in this relationship by employing a dynamic panel smooth transition regression model to account for potential endogeneity problems. We find that there do exist threshold values (that are different for different groups of countries): below the threshold, household income inequality is growth enhancing, while above the threshold, inequality has a negative or no effect on economic growth.