IDEAS home Printed from https://ideas.repec.org/p/zbw/gdec06/4725.html
   My bibliography  Save this paper

The relationship between economic growth and inequality: evidence from the age of market liberalism

Author

Listed:
  • Angeles-Castro, Gerardo

Abstract

Based on panel data we find that the inequality-growth relationship follows an ordinary-U curve during the period 1970-1998, in which inequality first decreases and then increases with economic growth. We also find some evidence that the increasing pattern of inequality may reverse at higher levels of income. The time-series approach complements the analysis and reveals that a substantial group of countries capture a minimum turning point in the 1980s on average and it is found to occur earlier for developed economies compare to developing ones; only a few countries reverse inequality in a latter stage and display a maximum turning point during the late 1990s; these countries are associated with a high governance indicator and moderate expansion of trade and FDI. Hence, during the era of market openness the inequalitygrowth relationship changed and became positive, although it is likely that income distribution improves with economic growth at a latter stage; the implication of this is that this relationship can be described in period cycles.

Suggested Citation

  • Angeles-Castro, Gerardo, 2006. "The relationship between economic growth and inequality: evidence from the age of market liberalism," Proceedings of the German Development Economics Conference, Berlin 2006 2, Verein für Socialpolitik, Research Committee Development Economics.
  • Handle: RePEc:zbw:gdec06:4725
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/19830/1/Angeles.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Kanbur, Ravi, 2000. "Income distribution and development," Handbook of Income Distribution,in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 13, pages 791-841 Elsevier.
    2. Deininger, Klaus & Squire, Lyn, 1996. "A New Data Set Measuring Income Inequality," World Bank Economic Review, World Bank Group, vol. 10(3), pages 565-591, September.
    3. repec:mes:challe:v:33:y:1990:i:4:p:57-59 is not listed on IDEAS
    4. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 38(2), pages 112-134.
    5. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    6. Ozlem Onaran, 2004. "Life After Crisis For Labor And Capital in the Era of Neoliberal Globalization," Working Papers geewp43, Vienna University of Economics and Business Research Group: Growth and Employment in Europe: Sustainability and Competitiveness.
    7. Anand, Sudhir & Kanbur, S. M. R., 1993. "Inequality and development A critique," Journal of Development Economics, Elsevier, vol. 41(1), pages 19-43, June.
    8. Barro, Robert J, 2000. "Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March.
    9. Peter Jacobsen & David Giles, 1998. "Income distribution in the United States: Kuznets' inverted-U hypothesis and data non-stationarity," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 7(4), pages 405-423.
    10. Milanovic, Branko, 1995. "Poverty, inequality, and social policy in transition economies," Policy Research Working Paper Series 1530, The World Bank.
    11. Judson, Ruth A. & Owen, Ann L., 1999. "Estimating dynamic panel data models: a guide for macroeconomists," Economics Letters, Elsevier, vol. 65(1), pages 9-15, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Caroline Daymon & Céline Gimet, 2007. "Les déterminants de l'inégalité et le rôle de l'équité dans les pays du Moyen-Orient et de l'Afrique du Nord," Post-Print halshs-00371042, HAL.
    2. repec:hur:ijarbs:v:7:y:2017:i:6:p:73-88 is not listed on IDEAS
    3. Eric S. Lin & Hamid E. Ali, 2009. "Military Spending and Inequality: Panel Granger Causality Test," Journal of Peace Research, Peace Research Institute Oslo, vol. 46(5), pages 671-685, September.
    4. Muhammad Shahbaz, 2010. "Income inequality-economic growth and non-linearity: a case of Pakistan," International Journal of Social Economics, Emerald Group Publishing, vol. 37(8), pages 613-636, July.
    5. Gerardo Angeles-Castro, 2007. "Factors Driving Changes in Income Distribution in Post-Reform Mexico," Studies in Economics 0706, School of Economics, University of Kent.

    More about this item

    Keywords

    Economic liberalisation; Income distribution; Economic Growth; Dynamic Panel Data Models; Time Series Analysis;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:gdec06:4725. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics). General contact details of provider: http://edirc.repec.org/data/vfselea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.