Growth and Income Inequality: A Comparative Analysis

Abstract

This paper investigates whether the relationship between income inequality and growth changes over time. Two time periods, covering 1970–1985 and 1985–1999, are analyzed and compared. A statistically significant relationship between inequality and growth in either time period fails to emerge. However, there are indications that effect of inequality on growth may be different in the nineties when compared to the seventies. In the literature, a consistent negative effect of inequality on growth is documented although the significance of the effect is open to debate. This paper also finds a negative effect of income inequality on growth in the seventies but, although statistically insignificant, a consistently positive effect in the nineties.

Is There Causality Relationship Between Economic Growth and Income Inequality?: Panel Data Evidence From Indonesia

“…This finding is consistent with Woo's (2011) study using cross-country data set of 93 countries which concludes that there is a negative relationship between income inequality and long-term growth. Nissim (2007) and Binatli (2012) also provide the same conclusion that there is a negative relationship between the two variables. However, this finding is not in line with the study conducted by Li et al(2016) for the case of Chinese economy proving the empirical evidence that there exists a robust positive long-run relationship between income inequality and growth in post-reform China.…”

“…In contrast to these findings, Nissim (2007) proved that economic growth significantly reduces income inequality. Binatli (2012) concluded that economic growth was negatively and insignificantly associated with income inequality. Other empirical findings concluded that income inequality was associated with low growth rates (Pede et al 2009;Davis, 2007;Castello-Climent, 2010).…”

Determinan pertumbuhan ekonomi berkelanjutan wilayah induk dan pemekaran di kawasan timur Indonesia

“…Penelitian lain mengenai pertumbuhan ekonomi dan ketimpangan memiliki hasil yang berbeda-beda di mana ketimpangan dapat berpengaruh secara positif dan negatif tergantung pada kondisinya (Binatli, 2012). Di Papua Barat, penelitian yang dihasilkan menyatakan bahwa pasca kebijakan otonomi daerah, ketimpangan sudah berada pada level medium yang berarti ketimpangan sudah berkurang pasca kebijakan tersebut dan terdapat perbaikan konstruksi dalam rangka meningkatkan pembangunan ekonomi (Nugraha et al, 2017).…”

Implications of De-Industrialization for Poverty and Income-Inequality in Pakistan

“…This scheme of identifi cation is considered more appropriate keeping in view the major hypothesis that, 'trade liberalization is detrimental to equality because it accelerated the deindustrialization in Pakistan'. Moreover, the globalization as tainted by several economic crises is expected to have implications for income inequality (Binatli (2012)). Herewith, the trade-off between GDP per capita and income inequality serves to test the Kuznets hypothesis (1995).…”