The Journal of Economic Inequality

, Volume 10, Issue 4, pp 489–503

Inequality and growth: evidence from panel cointegration

Open Access
Article

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

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

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