The Institutional Foundations of Inequality and Growth
AbstractAfter a decade of research, the effect of inequality on long-run economic growth remains unresolved, in part because researchers have treated omitted variable bias as an estimation problem rather than a deeper question of causality. In this article we argue that the key omitted variable is the quality of economic institutions. Using both cross-country and panel data specifications, we find no direct effect of inequality on growth in the long-run. Rather, the protection of property rights simultaneously raises growth rates and reduces income inequality. We interpret these findings as evidence that insecure property rights disproportionately disadvantage the poor.
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Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Journal of Development Studies.
Volume (Year): 47 (2011)
Issue (Month): 7 ()
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- Davis, Lewis S. & Knauss, Matthew, 2013. "The moral consequences of economic growth: An empirical investigation," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 42(C), pages 43-50.
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- Caracciolo, Francesco & Santeramo, Fabio Gaetano, 2012. "Price trends and income inequalities: will Sub-Saharan-Africa reduce the gap?," MPRA Paper 45196, University Library of Munich, Germany.
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