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Does Income Distribution Affect U.S. State Economic Growth? *
Author(s) -
Partridge Mark D.
Publication year - 2005
Publication title -
journal of regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.171
H-Index - 79
eISSN - 1467-9787
pISSN - 0022-4146
DOI - 10.1111/j.0022-4146.2005.00375.x
Subject(s) - linkage (software) , economics , econometrics , distribution (mathematics) , short run , affect (linguistics) , inequality , income distribution , variation (astronomy) , macroeconomics , mathematics , psychology , biology , biochemistry , physics , communication , gene , astrophysics , mathematical analysis
. Numerous models propose an income‐distribution/growth linkage, but the empirical evidence is ambiguous and depends on the regression approach. Mixed findings are not unexpected if there are differing short‐ and long‐term responses. Approaches utilizing cross‐sectional variation primarily reflect long‐run effects, whereas those using time‐series variation primarily reveal short‐run effects. This study reconciles these issues using U.S. state data. After allowing for short‐ and long‐run responses and for separate effects between the tails and middle of the distribution, the consistent pattern is the middle‐class share and overall inequality are positively related to long‐run growth. However, the short‐run income‐distribution response is less clear.