Income Inequality is not Harmful for Growth: Theory and Evidence

Li, Hongyi; Zou, Heng-Fu

doi:10.1111/1467-9361.00045

Cited by 510 publications

(341 citation statements)

References 31 publications

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“…Furthermore, Li and Zou (1998) obtained the same results using five year periods for their samples. Although both studies have a short-term perspective, they represent the main opposition to the widely accepted notion that inequality has negative effects on growth.…”

Section: The Relationship Between Inequality and Growthsupporting

confidence: 52%

Income Inequality, Fertility, Human Capital Accumulation and Economic Growth in Mexico

Charles-Coll¹,

Granados²,

Ramos³

2015

RWE

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This research analyses the relationship between the levels of inequality and the growth rate of the Mexican states using as theoretical reference the Inequality-Human capital theory proposed by De la Croix and Doepke (2003) which links negatively inequality to growth via its effects on the differentials in fertility rates and on human capital accumulation which affect the growth rate of a country on the long run. The findings are that the Mexican case fits exactly to the predictions. The poorest states are the ones with the higher fertility levels, the lower education levels and the ones in which the newborns mothers have the lower education level. It was also found that the richer states are the ones who absorb the effects of external economic shocks. The results infer that redistributive policies are not as important as providing equal and universal access to education in order to boost long term growth.

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Section: The Relationship Between Inequality and Growthsupporting

confidence: 52%

Income Inequality, Fertility, Human Capital Accumulation and Economic Growth in Mexico

Charles-Coll¹,

Granados²,

Ramos³

2015

RWE

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“…As the discussion in the previous subsection suggests, there are many reasons to think that this relationship may be biased upward or downwards. To address this problem, Li and Zou (1998) and Forbes (2000) used the Deininger and Squire data set to focus on the impact of inequality on short run (5 years) growth, and introduced a linear fixed effect. 43 The results change rather dramatically: The coefficient of inequality in this specification is positive, and significant.…”

Section: Empirical Evidencementioning

confidence: 99%

Growth Theory through the Lens of Development Economics

2004

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“…In the second interpretation, inequality is seen as a driver for change and progress (e.g. Li and Zou, 1998). Although some levels of income inequality can motivate breakthroughs, the levels recorded in the USA for the last 30 years point to a deep systemic dysfunctionality that actually hampers growth and prosperity.…”

Section: Resultsmentioning

confidence: 99%

The Role of Technological Change in Income Inequality in the United States

Deskoska¹,

Vlčková²

2018

AOP

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This paper examines the impact of the technological change on income inequality in the United States of America. This is done by integrating theoretical and analytical findings of the channels through which technological change affects income inequality. The research is based on centurylong income inequality data sets, although it prioritises the study of income inequality between the 1970s and the 2010s. The two major causes of rising income inequality have been technological change and globalisation. The paper also accounts for the other inequality triggers that have resulted from the political and economic structure of the country. The spread of automatisation and computerisation and of other changes associated with The Fourth Industrial Revolution are likely to reinforce skill-biased technological change. Therefore, new measures addressing income inequality, such as Universal Basic Income, are discussed.

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Income Inequality is not Harmful for Growth: Theory and Evidence

Cited by 510 publications

References 31 publications

Income Inequality, Fertility, Human Capital Accumulation and Economic Growth in Mexico

Income Inequality, Fertility, Human Capital Accumulation and Economic Growth in Mexico

Growth Theory through the Lens of Development Economics

The Role of Technological Change in Income Inequality in the United States

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