Inequality and Growth: What Can the Data Say?
AbstractThis paper describes the correlations between inequality and the growth rates in cross-country data. Using non-parametric methods, we show that the growth rate is an inverted U-shaped function of net changes in inequality: Changes in inequality (in any direction) are associated with reduced growth in the next period. The estimated relationship is robust to variations in control variables and estimation methods. This inverted U-curve is consistent with a simple political economy model, although, as we point out, efforts to interpret this model causally run into difficult identification problems. We show that this non-linearity is sufficient to explain why previous estimates of the relationship between the level of inequality and growth are so different from one another.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7793.
Date of creation: Jul 2000
Date of revision:
Publication status: published as Banerjee, Abhijit V. and Esther Duflo. "Inequality And Growth: What Can The Data Say?," Journal of Economic Growth, 2003, v8(3,Sep), 267-299.
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Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
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Other versions of this item:
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Doit-on craindre la hausse des inÃ©galitÃ©s ?
by firstname.lastname@example.org (David Marguerit) in BS Initiative on 2013-12-03 13:44:04
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by ? in D'un champ l'autre on 2014-07-05 23:59:00
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