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Inequality And Growth: From Micro Theory To Macro Empirics

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  • Niko Gobbin
  • Glenn Rayp
  • Dirk Van de gaer

Abstract

To establish the nature of the link between income distribution and economic growth by means of a standard growth regression, one needs to collapse an entire income distribution into a scalar measure of inequality. Due to data shortages macro-economic research has typically been forced to use the gini coefficient for this purpose. Using a simulation set up we check how well different measures of inequality or poverty succeed in detecting the correct relationship. We find that the gini coefficient might not be the worst of choices, but the comparison of the explanatory power of different inequality measures can help to identify the theoretical mechanism through which inequality affects growth.

(This abstract was borrowed from another version of this item.)

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Bibliographic Info

Article provided by Scottish Economic Society in its journal Scottish Journal of Political Economy.

Volume (Year): 54 (2007)
Issue (Month): 4 (09)
Pages: 508-530

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Handle: RePEc:bla:scotjp:v:54:y:2007:i:4:p:508-530

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References

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  1. Atkinson, A.B. & Brandolini, A., 2000. "Promise and Pitfalls in the Use of 'Secondary' Data -Sets: Income Inequality in OECD Countries," Papers 379, Banca Italia - Servizio di Studi.
  2. Niko Gobbin & Glenn Rayp, 2004. "Inequality and Growth: Does Time Change Anything," Development and Comp Systems 0402005, EconWPA.
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Cited by:
  1. Michal Brzezinski, 2013. "Income polarization and economic growth," Working Papers 296, ECINEQ, Society for the Study of Economic Inequality.
  2. Jürgen Faik, 2012. "Impacts of an Ageing Society on Macroeconomics and Income Inequality – The Case of Germany since the 1980s," Working Papers 272, ECINEQ, Society for the Study of Economic Inequality.
  3. Michel Dumont & Nikolina Stojanovska & Ludo Cuyvers, 2011. "World inequality, globalisation, technology and labour market institutions," International Journal of Manpower, Emerald Group Publishing, vol. 32(3), pages 257-272, July.

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