The elusive inequality-economic growth relationship: are there differences between cities and the countryside?

Fallah, Belal; Partridge, Mark D.

doi:10.1007/s00168-006-0106-2

Cited by 62 publications

(74 citation statements)

References 56 publications

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“…those places with more inequality. Because cities have thick labour markets and agglomeration economies, the positive incentive effects of inequality are found in larger cities, a point confirmed by Fallah and Partridge (2007) using data from the 1990s. Thus, inequality and the associated economic incentives were engines of growth for American cities that helped them become the global leaders in their respective strengths.…”

Section: Introductionsupporting

confidence: 50%

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Rising Inequality in an Era of Austerity: The Case of the US

Partridge

Weinstein

2013

European Planning Studies

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US inequality has rapidly increased since the early 1970s. For advanced economies, inequality is linked to stronger incentives that enhance growth, education, innovation and entrepreneurship. However, the rise in US inequality is concentrated in the top 1%. Hence it is increasingly possible that economic rewards may be too uncertain to promote effort, suggesting the US has crossed a tipping point in which inequality reduces growth. Other costs include more social and political instability, making inequality the next potential "crisis" facing America. This study first examines trends in inequality and then reviews arguments that suggest that it is both good and bad for growth in America's cities. We then provide evidence that there has been a reversal in the effects of inequality after 2000 with it now being associated with less income and job growth in US metropolitan areas. We conclude by arguing that no general solution is possible without significant political reforms that equalize political influence.

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Section: Introductionsupporting

confidence: 50%

“…Put simply, if you made it big in the US with its high inequality, you had the opportunity for significant returns that are unavailable elsewhere. Indeed, Fallah and Partridge (2007) show that historically, income growth in US metropolitan counties is positively associated with inequality, especially in larger urban areas.…”

Section: Introductionmentioning

confidence: 98%

Rising Inequality in an Era of Austerity: The Case of the US

Partridge

Weinstein

2013

European Planning Studies

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“…When using fixed effects, however, if the underlying causal factors in the growth process are persistent, the long-run cross-sectional effects will be subsumed into the fixed effects (Fallah and Partridge 2007). Indeed, as Forbes (2000) highlights, it could be interesting to identify the time-invariant variables, omitted in panel analysis and that could generate the negative bias in the inequality coefficient in cross-country growth regressions, as well as to evaluate the different channels through which inequality, growth, and any other variables are related.…”

Section: The Different Effects Of Inequality On Economic Growth: Litementioning

confidence: 99%

“…This growth-enhancing effect relates to incentives for capital accumulation (Galor 2009) and for innovation (Mirrlees 1971), to incentives to work hard and take risks (WDR 2006), and to agglomeration economies (Fallah and Partridge 2007;CastellsQuintana and Royuela 2011). 4…”

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confidence: 99%

Tracking positive and negative effects of inequality on long-run growth

Castells‐Quintana

Royuela

2017

Empir Econ

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“…8 On the other hand, and again as it happens with the impact of inequality on growth, it seems reasonable to expect that the impact of urbanization on growth is dependent not only on income levels but also on their distribution (which has not yet been empirically considered). First, a certain degree of inequality intensifies the growth-enhancing incentives and agglomeration economies of urban areas -in particular due to better labour market matching and specialization (Fallah and Partridge 2007). 9 However, as Fallah and Partridge highlight, high inequality also weakens social cohesion.…”

Section: 2the Effects Of Agglomeration On Economic Growthmentioning

confidence: 99%

Agglomeration, inequality and economic growth

Castells

Royuela

2014

Ann Reg Sci

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Agglomeration and income inequality at country level can be both understood as concentration of physical and human capital in the process of economic development. As such, it seems pertinent to analyse their impact on economic growth considering both phenomena together. By estimating a dynamic panel specification at country level, this paper analyses how agglomeration and inequality (both their levels and their evolution) influence long-run economic growth. In line with previous findings, our results suggest that while high inequality levels are a limiting factor for long-run growth, agglomeration processes can be associated with economic growth, at least in countries at early stages of development. Moreover, we find that the growth-enhancing benefits from agglomeration processes depend not only on the country's level of development, but also on its initial income distribution (something, to the best of our knowledge, not considered before). In fact, probably suggesting a social dimension to congestion diseconomies, increasing agglomeration is associated with lower growth when income distribution is particularly unequal.

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The elusive inequality-economic growth relationship: are there differences between cities and the countryside?

Abstract: R11, O40, O18, E25,

Cited by 62 publications

References 56 publications

Rising Inequality in an Era of Austerity: The Case of the US

Rising Inequality in an Era of Austerity: The Case of the US

Tracking positive and negative effects of inequality on long-run growth

Agglomeration, inequality and economic growth

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