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The Effect of Growth Volatility on Income Inequality

Author Info

  • Ho-Chuan Huang

    (Tamkang University)

  • WenShwo Fang

    (Feng Chia University)

  • Stephen M. Miller

    (University of Nevada, Las Vegas and University of Connecticut)

Abstract

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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File URL: http://web2.uconn.edu/economics/working/2012-09.pdf
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Paper provided by University of Connecticut, Department of Economics in its series Working papers with number 2012-09.

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Length: 32 pages
Date of creation: Jun 2012
Date of revision:
Handle: RePEc:uct:uconnp:2012-09
Note: Stephen M. Miller is corresponding author
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University of Connecticut 365 Fairfield Way, Unit 1063 Storrs, CT 06269-1063

Phone: (860) 486-4889
Fax: (860) 486-4463
Web page: http://www.econ.uconn.edu/

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Keywords: Income inequality; growth volatility; mean group estimator; pooled mean group estimator;

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Find related papers by JEL classification:
  • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
  • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
  • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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Cited by:

  1. Cole, Ismail M., 2014. "Short- and long-term growth effects of special interest groups in the U.S. states: A dynamic panel error-correction approach," MPRA Paper 54455, University Library of Munich, Germany, revised 02 Mar 2014.
  2. Koehler-Geib,Fritzi & Hnatkovska,Viktoria, 2015. "Business cycles accounting for Paraguay," Policy Research Working Paper Series 7284, The World Bank.
  3. Ibrahim, Mansor H., 2016. "Business cycle and bank lending procyclicality in a dual banking system," Economic Modelling, Elsevier, vol. 55(C), pages 127-134.

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