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Inequality and growth: evidence from panel cointegration

  • Dierk Herzer


  • Sebastian Vollmer


This paper uses heterogeneous panel cointegration techniques to estimate the long-run effect of income inequality on per-capita income for 46 countries over the period 1970–1995. We find that inequality has a negative long-run effect on income, both for the sample as a whole and for important sub-groups within the sample (developed countries, developing countries, democracies, and non-democracies). The effect is economically important, with a magnitude about half as high as the magnitude of an increase in the investment share. Copyright The Author(s) 2012

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Article provided by Springer in its journal The Journal of Economic Inequality.

Volume (Year): 10 (2012)
Issue (Month): 4 (December)
Pages: 489-503

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Handle: RePEc:kap:jecinq:v:10:y:2012:i:4:p:489-503
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