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A simultaneous equation model of economic development and income inequality

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Abstract

The paper extends existing work on inequality and economic development by estimating a cross-country structural model that identifies bi-directional relationships between income inequality and other indicators of social and economic development. Overall, lower inequality is associated with improvements in other development indicators, but this is the result of several complex interactions. The most striking feature of the structural model is the insight it provides into the reasons behind the negative ‘Africa dummy’ in previous cross-country growth studies.

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Authors and Affiliations

  1. Department of Economics, University of Otago, PO Box 56, Dunedin, New Zealand

    David Fielding

  2. Department of Economics, University of Leicester, University Road, Leicester, LE1 7RH, United Kingdom

    Sebastian Torres

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  1. David Fielding
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  2. Sebastian Torres
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Correspondence to David Fielding.

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Fielding, D., Torres, S. A simultaneous equation model of economic development and income inequality. J Econ Inequal 4, 279–301 (2006). https://doi.org/10.1007/s10888-005-9016-2

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  • DOI: https://doi.org/10.1007/s10888-005-9016-2

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