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Reassessing the Relationship between Economic Growth and Inequality
Author(s) -
Vu Ha,
Mukhopadhaya Pundarik
Publication year - 2011
Publication title -
economic papers: a journal of applied economics and policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.245
H-Index - 19
eISSN - 1759-3441
pISSN - 0812-0439
DOI - 10.1111/j.1759-3441.2011.00107.x
Subject(s) - inequality , economics , economic inequality , inflation (cosmology) , sample (material) , development economics , economic expansion , corporate governance , income inequality metrics , demographic economics , macroeconomics , finance , mathematical analysis , chemistry , physics , mathematics , chromatography , theoretical physics
This study attempts to reassess the relationship between economic growth and inequality using an up to date data set, 2003–2007, for a sample of seventy‐four developed and developing countries. Average economic growth during this studied period is regressed against the 2003 values of inequality, growth, education, human development, inflation and governance quality using OLS cross‐country models. The findings support a negative impact of inequality on economic growth for the entire sample. In particular, an increase (decrease) in inequality would lead to greater deterioration (expansion) in economic development in low‐income countries than in high‐ and middle‐income countries. Furthermore, improvement in governance does not either stimulate or hinder the economic growth.