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The Effect of Growth Volatility on Income Inequality

  • Ho-Chuan (River) Huang


    (Department of Banking and Finance, Tamkang University)

  • WenShwo Fang


    (Department of Economics, Feng Chia University)

  • Stephen M. Miller


    (Department of Economics, University of Nevada, Las Vegas)

This paper assesses the long-run effect of growth volatility on income inequality using a comprehensive panel of annual U.S. state-level data during the 1945 to 2004 period. Using the pooled mean group (PMG) estimator, we find overwhelming evidence supporting the hypothesis that larger growth volatility positively and significantly associates with higher income inequality. In addition, our key finding is robust to alternative lag structures, conditioning variables, inequality measures, volatility indicators, and time periods.

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Paper provided by University of Nevada, Las Vegas , Department of Economics in its series Working Papers with number 1203.

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Length: 31 pages
Date of creation: Apr 2012
Date of revision:
Handle: RePEc:nlv:wpaper:1203
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