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Economic Growth and Income Inequality Nexus: An Empirical Analysis for Pakistan

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  • Majeed, Muhammad Tariq

Abstract

This study investigates the impact of income inequality on economic growth in Pakistan using annual time series data from 1975 to 2013. The empirical analysis for the effect of income inequality on economic growth is based on the ARDL approach to cointegration. The empirical findings show that inequality exerts significantly positive influence on annual economic growth of Pakistan. It implies that annual growth is not driven by the poor which is also confirmed by the negative influence of poverty on growth. Though inequality exerts positive influence on growth but such type of growth cannot be sustained as the poor are not part of the growth process.

Suggested Citation

  • Majeed, Muhammad Tariq, 2016. "Economic Growth and Income Inequality Nexus: An Empirical Analysis for Pakistan," MPRA Paper 89705, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:89705
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    Cited by:

    1. Mdingi, Kholeka & Ho, Sin-Yu, 2023. "Income inequality and economic growth: An empirical investigation in South Africa," MPRA Paper 117733, University Library of Munich, Germany.
    2. Farzana Naheed Khan & M. Tariq Majeed, 2018. "Poverty Traps and Economic Growth: Evidence from Pakistan," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 10(4), pages 121-142, December.
    3. Ademola Obafemi Young, 2019. "Growth Impacts of Income Inequality: Empirical Evidence From Nigeria," Research in World Economy, Research in World Economy, Sciedu Press, vol. 10(3), pages 226-262, December.

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    More about this item

    Keywords

    economic growth; income inequality; poverty; Pakistan;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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