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Kuznets inverted-U hypothesis revisited: a time-series approach using US data

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  • M. Bahmani-Oskooee
  • A. Gelan

Abstract

Kuznets' inverted-U hypothesis implies that economic growth worsens income inequality first and improves it later at a higher stage of economic development. In addition to economic growth, other factors such as population growth, resource endowment, price instability, openness, currency devaluation, etc. have been identified as determinants of income inequality. Previous research used cross-sectional data to test not only the Kuznets' hypothesis, but also empirical validity of other factors and provided mixed conclusions. In this article we use time-series data from the US and recent advances in time-series modelling to show that economic growth worsens income inequality in the short-run and improves it in the long-run.

Suggested Citation

  • M. Bahmani-Oskooee & A. Gelan, 2008. "Kuznets inverted-U hypothesis revisited: a time-series approach using US data," Applied Economics Letters, Taylor & Francis Journals, vol. 15(9), pages 677-681.
  • Handle: RePEc:taf:apeclt:v:15:y:2008:i:9:p:677-681 DOI: 10.1080/13504850600749040
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    References listed on IDEAS

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    1. Philippe Aghion & Nick Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2005. "Competition and Innovation: an Inverted-U Relationship," The Quarterly Journal of Economics, Oxford University Press, pages 701-728.
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    7. Francisco Alcalá & Antonio Ciccone, 2004. "Trade and Productivity," The Quarterly Journal of Economics, Oxford University Press, vol. 119(2), pages 613-646.
    8. repec:hrv:faseco:30747190 is not listed on IDEAS
    9. Irwin, Douglas A. & Tervio, Marko, 2002. "Does trade raise income?: Evidence from the twentieth century," Journal of International Economics, Elsevier, pages 1-18.
    10. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, pages 1263-1297.
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    Cited by:

    1. Julio César Alonso Cifuentes & Ángela María González Terán,, 2017. "Evaluación de la Hipótesis de Kuznets para Colombia con una aproximación de series de tiempo: 1977-2005," REVISTA APUNTES DEL CENES, UNIVERSIDAD PEDAGOGICA Y TECNOLOGICA DE COLOMBIA, vol. 36(63), pages 43-62, January.
    2. Muhammad Shahbaz & Ijaz Rehman & Nurul Mahdzan, 2014. "Linkages between income inequality, international remittances and economic growth in Pakistan," Quality & Quantity: International Journal of Methodology, Springer, pages 1511-1535.
    3. Reeson, Andrew & Measham, Thomas G. & Hosking, Karin, 2012. "Mining activity, income inequality and gender in regional Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 56(2), June.
    4. Mehmet Mercan & Ozlem Azer, 2013. "The Relationship between Economic Growth and Income Distribution in Turkey and the Turkish Republics of Central Asia and Caucasia: Dynamic Panel Data Analysis with Structural Breaks," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 3(2), pages 165-182, December.
    5. Muhammad, Shahbaz & Faridul, Islam & Muhammad Sabihuddin, Butt, 2011. "Devaluation and income inequality: Evidence from Pakistan," MPRA Paper 35522, University Library of Munich, Germany, revised 21 Dec 2011.
    6. repec:eee:eneeco:v:65:y:2017:i:c:p:98-104 is not listed on IDEAS
    7. Muhammad Shahbaz & Ijaz Rehman & Nurul Mahdzan, 2014. "Linkages between income inequality, international remittances and economic growth in Pakistan," Quality & Quantity: International Journal of Methodology, Springer, pages 1511-1535.

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