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The income inequality curve in the last 100 years: What happened to the Inverted-U?

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  • Sayed, Adham
  • Peng, Bin

Abstract

This paper examines the shape of the curve that represents the long-run relationship between income inequality and economic growth, using data from four developed countries (USA, UK, France, and Germany) over the period 1915 – 2014. The analysis is carried using a panel data technique (fixed, random, and interactive effects) that takes into account common shocks. We find that in the long-term, this curve has the shape of an “N-shape” and that the Kuznets curve does not explain this path. We also present many factors that may affect the path of inequality up or down, the most important is political, economic and demographic, specifically technological change, globalization, social transfers, economic policies, trade unions, taxation, education, war, and epidemics.

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  • Sayed, Adham & Peng, Bin, 2020. "The income inequality curve in the last 100 years: What happened to the Inverted-U?," Research in Economics, Elsevier, vol. 74(1), pages 63-72.
    • Handle: RePEc:eee:reecon:v:74:y:2020:i:1:p:63-72
    DOI: 10.1016/j.rie.2019.12.001
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    Cited by:

    1. Cuesta, Lizeth & Ruiz, Yomara, 2021. "Efecto de la globalización sobre la desigualdad. Un estudio global para 104 países usando regresiones cuantílicas [Effect of globalization on inequality. A global study for 104 countries using quan," MPRA Paper 111022, University Library of Munich, Germany.
    2. Ionuț Jianu & Marin Dinu & Dragoș Huru & Alexandru Bodislav, 2021. "Examining the Relationship between Income Inequality and Growth from the Perspective of EU Member States’ Stage of Development," Sustainability, MDPI, vol. 13(9), pages 1-16, May.
    3. Adham Sayed, 2020. "Income Inequality and Public Debt: What Can Be Learned from the Lebanese Indebtedness?," Business and Economic Research, Macrothink Institute, vol. 10(4), pages 83-106, December.
    4. Byron Quito & María de la Cruz del Río‐Rama & José Álvarez‐García & Ronny Correa‐Quezada, 2022. "Impact factors and space‐time characteristics of income inequality in a global sample," Sustainable Development, John Wiley & Sons, Ltd., vol. 30(6), pages 1850-1868, December.
    5. Sayed Adham, 2020. "Is there a Kuznets Curve in the Arab Region? An Empirical Investigation," Review of Middle East Economics and Finance, De Gruyter, vol. 16(2), pages 1-17, August.

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    More about this item

    Keywords

    Developed countries; N-shaped; Income inequality; Kuznets curve; Common shocks; Panel data;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • N32 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - U.S.; Canada: 1913-
    • N34 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Europe: 1913-

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