Open Access
Article

The Journal of Economic Inequality

, Volume 10, Issue 4, pp 489-503

Inequality and growth: evidence from panel cointegration

Authors

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

DOI: 10.1007/s10888-011-9171-6

Abstract

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.

Keywords

Inequality Growth Panel cointegration

JEL Classification

O11 O15 C23

Copyright information

© The Author(s) 2011