Growth Impacts of Income Inequality: Empirical Evidence From Nigeria

Abstract

The debate on whether income inequality promotes, restricts, or is independent of economic growth has been widely studied and discussed in development economics discourse. However, a careful reading of this extensive extant and burgeoning literature suggests that, other than the ambivalent nature and the fact that the bulk of these studies relied heavily on cross-section/-country/panel econometric analysis, empirical studies examining the nexus in the context of less developed economies, particularly, African countries, has received less attention, as most of the extant studies predominantly focused on developed economies. This current study, thus, attempts to examine the impact of inequality on growth in Nigeria spanning between the period 1970 and 2018. It also examined the theoretical predictions of some of the distinct transmission channels through which inequality impacts growth. Time series econometrics were applied. The results obtained consistently revealed that inequality hurts long-run growth in Nigeria. Also, the results obtained revealed that inequality in income increases relative redistribution and fertility, but lessens investment, gross enrollment ratio, and property rights protection in Nigeria, which may in turn impede growth.

The Relationship Between Economic Growth, Inequality and Redistribution in Selected OECD Countries: Evidences From Panel Cointegration and Asymmetric Causality Analysis

“…Ekonomi ve politikanın birbiriyle olan ilişkisinden yola çıkarak oluşturulan farklı modeller sonucunda gelir eşitsizliğinin ekonomik büyümeyi negatif etkilediği tespit edilmiştir. Young (2019) Nijerya için yaptığı bir çalışmasında 1970-2018 yıllarında zaman serisi analiz yöntemleri ile gelir eşitsizliği ve ekonomik büyüme arasındaki ilişkiyi irdelemiş; eşitsizliğin ekonomik büyüme üzerindeki etkisini bazı aktarım kanallarının teorik tahminlerini de dahil ederek test etmiştir. Çalışmasında, Nijerya'da eşitsizliğin uzun vadeli ekonomik büyümeye zarar verdiğini, gelirdeki eşitsizliğin nispi yeniden dağılım ve doğurganlığı artırdığını, ancak yatırımları ve mülkiyet haklarının korunmasını azalttığından dolayı büyümeyi engelleyebileceğini ortaya koymuştur.…”

The Growth of Nigeria's Economy From 1981 to 2019 in Relation to the Financing of Agriculture

“…(Central Bank of Nigeria, 20202). Overdependence on petroleum and imported products and services is continuing to deteriorate, which is holding back Nigeria's economic progress (Young 2019). Despite Nigeria's participation in international commerce, there is still widespread hunger, malnutrition, poverty, and inequality of income among people, corporate organisations, and political parties.…”

The Role of Avocado Production and Trade in Major Producing Districts, Tanzania: Income Inequality Decomposition Approach

“…Excessive income inequality can erode social cohesion, lead to political polarization, and lower economic growth. It hurts economic growth in the long run (Alesina & Perotti, 1996;Keefer & Knack, 2002;Young, 2019;Aboyade, 1978;Fajana, 1985;Deininger & Squire 1996;Rossana & Hoeven, 2001). As a result, reducing poverty and income inequality has become a popular public policy among development agencies and exploring its nature and causes has attracted the attention of many economic growth scholars (Rao, 1969;Fei et al, 1978;Pyatt et al, 1980;Lerman & Yitzhaki, 1985).…”