The Journal of Economic Inequality

, Volume 10, Issue 4, pp 489–503

Inequality and growth: evidence from panel cointegration


  • Dierk Herzer
    • Schumpeter School of Business and EconomicsUniversity of Wuppertal
    • Center for Population and Development StudiesHarvard University
    • Institute of MacroeconomicsUniversity of Hannover
    • Development Economics Research GroupUniversity of Göttingen
Open AccessArticle

DOI: 10.1007/s10888-011-9171-6

Cite this article as:
Herzer, D. & Vollmer, S. J Econ Inequal (2012) 10: 489. doi:10.1007/s10888-011-9171-6


This paper uses heterogeneous panel cointegration techniques to estimate the long-run effect of income inequality on per-capita income for 46 countries over the period 1970–1995. We find that inequality has a negative long-run effect on income, both for the sample as a whole and for important sub-groups within the sample (developed countries, developing countries, democracies, and non-democracies). The effect is economically important, with a magnitude about half as high as the magnitude of an increase in the investment share.


InequalityGrowthPanel cointegration

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© The Author(s) 2011