The Journal of Economic Inequality

, Volume 10, Issue 4, pp 489–503

Inequality and growth: evidence from panel cointegration

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

Authors and Affiliations

  1. 1.Schumpeter School of Business and EconomicsUniversity of WuppertalWuppertalGermany
  2. 2.Center for Population and Development StudiesHarvard UniversityCambridgeUSA
  3. 3.Institute of MacroeconomicsUniversity of HannoverHannoverGermany
  4. 4.Development Economics Research GroupUniversity of GöttingenGöttingenGermany