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The Effect of Growth Volatility on Income Inequality

  • Ho-Chuan Huang

    (Tamkang University)

  • WenShwo Fang

    (Feng Chia University)

  • Stephen M. Miller

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

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 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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Web page: http://www.econ.uconn.edu/

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