IDEAS home Printed from https://ideas.repec.org/a/eee/streco/v74y2025icp116-128.html
   My bibliography  Save this article

If inequality is an economic choice, what is the relationship between inequality and growth?

Author

Listed:
  • Duong, Khanh

Abstract

This study provides evidence that when economic development – encompassing both growth and inequality – is treated as an objective that benefits the entire economy rather than specific agents, growth and inequality can coexist and have a positive relationship. While some may be concerned that such a trade-off inevitably leads to extreme inequality that could hinder future growth, the findings indicate that this trade-off occurs within controlled bounds of inequality, as measured by a Gini index below 28. Although extending growth might suggest an increase in inequality, practical constraints and the inherent limits to growth prevent such extremes. The analysis utilises multi-objective optimisation, conceptualising both inequality and growth as policy objectives. The model identifies optimal strategies that maximise growth and minimise inequality within the observed range of GDP per capita, with deviations from these optimal choices interpreted as penalties reflecting non-economic factors. The results further support the hypothesis of a natural rate of subjective inequality.

Suggested Citation

  • Duong, Khanh, 2025. "If inequality is an economic choice, what is the relationship between inequality and growth?," Structural Change and Economic Dynamics, Elsevier, vol. 74(C), pages 116-128.
    • Handle: RePEc:eee:streco:v:74:y:2025:i:c:p:116-128
    DOI: 10.1016/j.strueco.2025.02.014
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0954349X25000311
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.strueco.2025.02.014?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:streco:v:74:y:2025:i:c:p:116-128. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/525148 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.