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In search of thresholds in the household income inequality–growth relationship

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  • Suzanna‐Maria Paleologou

Abstract

This paper investigates the shape of the relationship between household income inequality and economic growth. More precisely we search for the existence of threshold values in this relationship by employing a dynamic panel smooth transition regression model to account for potential endogeneity problems. We find that there do exist threshold values (that are different for different groups of countries): below the threshold, household income inequality is growth enhancing, while above the threshold, inequality has a negative or no effect on economic growth.

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  • Suzanna‐Maria Paleologou, 2019. "In search of thresholds in the household income inequality–growth relationship," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 27(4), pages 989-1008, October.
    • Handle: RePEc:wly:ectrin:v:27:y:2019:i:4:p:989-1008
    DOI: 10.1111/ecot.12228
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    References listed on IDEAS

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    1. Persson, Torsten & Tabellini, Guido, 1994. "Is Inequality Harmful for Growth?," American Economic Review, American Economic Association, vol. 84(3), pages 600-621, June.
    2. Sherif Khalifa & Sherine El Hag, 2010. "Income Disparities, Economic Growth, And Development As A Threshold," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 35(2), pages 23-36, June.
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