Inequality and Growth: From Micro Theory to Macro Empirics
AbstractTo establish the nature of the link between income distribution and economic growth by means of a standard growth regression, one needs to collapse an entire income distribution into a scalar measure of inequality. Due to data shortages macro-economic research has typically been forced to use the gini coefficient for this purpose. Using a simulation set up we check how well different measures of inequality or poverty succeed in detecting the correct relationship. We find that the gini coefficient might not be the worst of choices, but the comparison of the explanatory power of different inequality measures can help to identify the theoretical mechanism through which inequality affects growth.
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Bibliographic InfoPaper provided by Ghent University, Faculty of Economics and Business Administration in its series Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium with number 04/258.
Length: 32 pages
Date of creation: Sep 2004
Date of revision:
income inequality; economic growth; inequality measures; poverty measures; simulation;
Other versions of this item:
- Niko Gobbin & Glenn Rayp & Dirk Van de gaer, 2007. "Inequality And Growth: From Micro Theory To Macro Empirics," Scottish Journal of Political Economy, Scottish Economic Society, vol. 54(4), pages 508-530, 09.
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-10-21 (All new papers)
- NEP-DEV-2004-10-21 (Development)
- NEP-MIC-2004-10-21 (Microeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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