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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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File URL: http://hdl.handle.net/10.1007/s10888-011-9171-6
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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
Contact details of provider: Web page: http://springerlink.metapress.com/link.asp?id=111137

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  25. James Galbraith, 2009. "Inequality, unemployment and growth: New measures for old controversies," Journal of Economic Inequality, Springer, vol. 7(2), pages 189-206, June.
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  28. Nair-Reichert, Usha & Weinhold, Diana, 2001. " Causality Tests for Cross-Country Panels: A New Look at FDI and Economic Growth in Developing Countries," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(2), pages 153-71, May.
  29. Mark W. Frank, 2009. "Inequality And Growth In The United States: Evidence From A New State-Level Panel Of Income Inequality Measures," Economic Inquiry, Western Economic Association International, vol. 47(1), pages 55-68, 01.
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