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Inequality and growth: A joint analysis of demand and supply

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  • Shen, Ling

Abstract

The paper contributes to the literature of income inequality and economic growth in two directions. First, it analyzes the impact of income inequality on economic growth both through the supply of human capital and the incentive to invent induced by the demand for better quality goods. Secondly, I decompose Gini-coefficient in two variables, which have different effect on the economic performance. Thus, our result suggests that the empirical research on the base of Gini-coefficient can not generate an overall relationship between income inequality and economic growth.

Suggested Citation

  • Shen, Ling, 2005. "Inequality and growth: A joint analysis of demand and supply," Proceedings of the German Development Economics Conference, Kiel 2005 30, Verein für Socialpolitik, Research Committee Development Economics.
  • Handle: RePEc:zbw:gdec05:3503
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    1. Dennis Tao Yang & Hao Zhou, 1999. "Rural-urban disparity and sectoral labour allocation in China," Journal of Development Studies, Taylor & Francis Journals, pages 105-133.
    2. Clarke, George R. G., 1995. "More evidence on income distribution and growth," Journal of Development Economics, Elsevier, vol. 47(2), pages 403-427, August.
    3. Chen, Been-Lon, 2003. "An inverted-U relationship between inequality and long-run growth," Economics Letters, Elsevier, vol. 78(2), pages 205-212, February.
    4. Ling Shen, 2004. "Education, Income Distribution and Innovation," Bonn Econ Discussion Papers bgse11_2004, University of Bonn, Germany.
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