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Refitting the Kuznets curve

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  • Desbordes, Rodolphe
  • Verardi, Vincenzo

Abstract

Using Baltagi and Li (2002)’s semi-parametric fixed effects regression estimator, we investigate the existence of an aggregate ‘Kuznets curve’ in a sample of 113 countries over the 1960–2000 period. Our results show that misspecification of the functional form in a panel model with fixed effects, and the failure to control for the endogeneity of income per capita, can lead to dramatically different conclusions regarding the impact of economic development on inequality. While we find observational evidence of an inverted U relationship between inequality and economic development, this relationship does not seem to be causal. Once we account for endogeneity, inequality appears to decrease monotonically with income per capita.

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Bibliographic Info

Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 116 (2012)
Issue (Month): 2 ()
Pages: 258-261

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Handle: RePEc:eee:ecolet:v:116:y:2012:i:2:p:258-261

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Web page: http://www.elsevier.com/locate/ecolet

Related research

Keywords: Income distribution; Inequality; Kuznets curve; Nonparametric analysis; Panel estimator;

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References

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Cited by:
  1. Christian Lessmann, 2011. "Spatial Inequality and Development - Is there an Inverted-U Relationship?," CESifo Working Paper Series 3622, CESifo Group Munich.
  2. Alfano, Maria Rosaria & Baraldi, Anna Laura & Papagni, Erasmo, 2014. "Electoral Systems and Corruption: the Effect of the Proportionality Degree," MPRA Paper 53138, University Library of Munich, Germany, revised 11 Nov 2013.
  3. Zhu, Hui-Ming & You, Wan-Hai & Zeng, Zhao-fa, 2012. "Urbanization and CO2 emissions: A semi-parametric panel data analysis," Economics Letters, Elsevier, vol. 117(3), pages 848-850.

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