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Revisiting the Relationship between Income Distribution and Economic Growth

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  • Ricardo Arguello

Abstract

Most models exploring the exploring the relationship between income inequality and economic growth postulate the existence of a ngative correlation between the two operating through diverse channels. Parallel to the theoretetical models a number of empirical studies have attempted to appraise this relationship. A broad consensus had built validating the existence of such negative correlation until some panel data studies tended to show the opposite result. The review of the ensuing debate as well as the empirical estimation undertook in this paper show that estimates may not be as robust as believed. It is suggested that country case studies may be a way to more appropriately explore this issue.********************************************************************************************************La mayoría de los modelos que exploran la relación entre la desigualdad en la distribución del ingreso y el crecimiento económico, postulan la existencia de una correlación negativa entre las dos que es generada a través de diferentes mecanismos. Paralelamente a los modelos teóricos, un número importante de estudios empíricos han tratado de evaluar esta relación. De este esfuerzo ha surgido un consenso amplio que valida la existencia de dicha relación negativa. No obstante, estudios recientes basados en el uso de datos de panel han producido el resultado contrario, documentando la presencia de una relación positiva entre desigualdad y crecimiento. El examen del debate generado a partir de estos resultados, así como el trabajo empírico adelantado en este estudio, indican que las estimaciones obtenidas en diversos trabajos pueden no ser tan robustas como se creía. En consecuancia, se sugiere que la realización de estudios de caso por país puede ser una mejor vía para explorar este tema.

Suggested Citation

  • Ricardo Arguello, 2004. "Revisiting the Relationship between Income Distribution and Economic Growth," Borradores de Investigación 4336, Universidad del Rosario.
  • Handle: RePEc:col:000091:004336
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    More about this item

    Keywords

    Income Distribution; Economic Growth; Panel Data Econometrics; Multiregional;
    All these keywords.

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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