IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

Income inequality, government expenditures and growth

Listed author(s):
  • Hannu Tanninen
Registered author(s):

    This paper investigates the relationship between income inequality and growth by utilizing the recently published Deininger-Squire data set. Most of the recent empirical growth literature suggests a negative relationship between inequality and growth on the basis of reduced-form growth equations. This is also found in the author's study. Some effort is made to discuss the argument behind the perceived negative relationship between inequality and growth. According to the fiscal policy approach a high level of income inequality leads to a higher demand for redistribution, which in turn affects growth through resource allocation out of investment or through incentive-distorting taxes needed to fund the redistribution. It is suggested that the last-mentioned relationship between government expenditure and growth is more likely to be non-linear; positive with small amounts and negative with large amounts. Such a relationship, however, is only found for public goods. Thus, government expenditure on 'law and order' may, with higher amounts of expenditure, have negative effects on growth, therefore indirectly supporting the socio-political stability argument.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Article provided by Taylor & Francis Journals in its journal Applied Economics.

    Volume (Year): 31 (1999)
    Issue (Month): 9 ()
    Pages: 1109-1117

    in new window

    Handle: RePEc:taf:applec:v:31:y:1999:i:9:p:1109-1117
    DOI: 10.1080/000368499323599
    Contact details of provider: Web page:

    Order Information: Web:

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:taf:applec:v:31:y:1999:i:9:p:1109-1117. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Longhurst)

    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.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.

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

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.