IDEAS home Printed from https://ideas.repec.org/a/mnb/finrev/v22y2023i4p136-159.html
   My bibliography  Save this article

Trends in Income Inequality and Its Impact on Economic Growth

Author

Listed:
  • Reka Vitkovics

    (ESIC Business & Marketing School)

Abstract

In recent years, climate change and the pandemic have brought the issue of the link between inequality and economic growth to the fore. In my essay, I examine this relationship, focusing on whether inequality has a positive or negative effect on economic growth. I approach the issue through the lens of income inequality without seeking to explore all aspects of inequality. Starting from the relevant conceptual framework, I present the link between global inequality and long-term growth. Since inequalities affect both developed and developing countries, I compare them and show why the latter cannot repeat the economic progress achieved by earlier industrialisers. Finally, I conclude that the clear objective should be to reduce excessive inequalities.

Suggested Citation

  • Reka Vitkovics, 2023. "Trends in Income Inequality and Its Impact on Economic Growth," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 22(4), pages 136-159.
    • Handle: RePEc:mnb:finrev:v:22:y:2023:i:4:p:136-159
    as

    Download full text from publisher

    File URL: https://en-hitelintezetiszemle.mnb.hu/letoltes/fer-22-4-e1-vitkovics.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Suresh D. Tendulkar & L.R. Jain, 1995. "Economic Growth, Relative Inequality, and Equity: The Case of India," Asian Development Review (ADR), World Scientific Publishing Co. Pte. Ltd., vol. 13(02), pages 138-168.
    2. Persson, Torsten & Tabellini, Guido, 1994. "Is Inequality Harmful for Growth?," American Economic Review, American Economic Association, vol. 84(3), pages 600-621, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gonzalez-Eiras, Martín & Niepelt, Dirk, 2012. "Ageing, government budgets, retirement, and growth," European Economic Review, Elsevier, vol. 56(1), pages 97-115.
    2. Graziella Bertocchi, 2011. "The Vanishing Bequest Tax: The Comparative Evolution Of Bequest Taxation In Historical Perspective," Economics and Politics, Wiley Blackwell, vol. 23(1), pages 107-131, March.
    3. Grossmann, Volker, 2008. "Risky human capital investment, income distribution, and macroeconomic dynamics," Journal of Macroeconomics, Elsevier, vol. 30(1), pages 19-42, March.
    4. Sobel, Andrew C., 2002. "State institutions, risk, and lending in global capital markets," International Business Review, Elsevier, vol. 11(6), pages 725-752, December.
    5. Hentschel, Jesko & Lanjouw, Jean Olson & Lanjouw, Peter & Poggi, Javier, 1998. "Combining census and survey data to study spatial dimensions of poverty," Policy Research Working Paper Series 1928, The World Bank.
    6. Thorvaldur Gylfason, 2019. "Inequality Undermines Democracy and Growth," CESifo Working Paper Series 7486, CESifo.
    7. Günther Rehme, 2007. "Education, Economic Growth and Measured Income Inequality," Economica, London School of Economics and Political Science, vol. 74(295), pages 493-514, August.
    8. Jun, Bogang & Hwang, Won-Sik, 2012. "Financial Hurdles for Human Capital Accumulation: Revisiting the Galor-Zeira Model," MPRA Paper 46317, University Library of Munich, Germany.
    9. Michael P. Keane & Eswar S. Prasad, 2002. "Inequality, Transfers, And Growth: New Evidence From The Economic Transition In Poland," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 324-341, May.
    10. Boone, Peter, 1996. "Politics and the effectiveness of foreign aid," European Economic Review, Elsevier, vol. 40(2), pages 289-329, February.
    11. Fawaz, Fadi & Rahnamamoghadam, Masha & Valcarcel, Victor, 2014. "A Refinement of the Relationship between Economic Growth and Income Inequality in Developing Countries," MPRA Paper 55268, University Library of Munich, Germany.
    12. Shinhye Chang & Rangan Gupta & Stephen M. Miller, 2018. "Causality Between Per Capita Real GDP and Income Inequality in the U.S.: Evidence from a Wavelet Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 135(1), pages 269-289, January.
    13. Jang Ok Cho & Hyo-Youn Chu & Hyung Seok E. Kim & Jaywon Lee, 2016. "Productivity Distribution and Economic Growth," Korean Economic Review, Korean Economic Association, vol. 32, pages 23-40.
    14. Bilin Neyapti, 2018. "Income distribution and economic crises," International Finance, Wiley Blackwell, vol. 21(3), pages 273-296, December.
    15. Takuma Kunieda & Masashi Takahashi, 2022. "Inequality and institutional quality in a growth model," Evolutionary and Institutional Economics Review, Springer, vol. 19(1), pages 189-213, April.
    16. European Commission, 2013. "Tax reforms in EU Member States - Tax policy challenges for economic growth and fiscal sustainability – 2013 Report," Taxation Papers 38, Directorate General Taxation and Customs Union, European Commission.
    17. Eduardo A. Haddad & Luis A. Galvis & Inácio F. Araújo-Junior & Vinicius A.Vale, 2018. "Impact Assessment of Scenarios of Interregional Transfers in Colombia," Documentos de Trabajo Sobre Economía Regional y Urbana 16767, Banco de la República, Economía Regional.
    18. Alan B. Krueger, 2002. "Inequality, Too Much of a Good Thing," Working Papers 845, Princeton University, Department of Economics, Industrial Relations Section..
    19. Boppart, Timo & Krusell, Per & Mitman, Kurt, 2018. "Exploiting MIT shocks in heterogeneous-agent economies: the impulse response as a numerical derivative," Journal of Economic Dynamics and Control, Elsevier, vol. 89(C), pages 68-92.
    20. Amir-ud-Din, Rafi & Rashid, Abdul & Ahmad, Shabbir, 2008. "Democracy, Inequality and Economic Development: The Case of Pakistan," MPRA Paper 26935, University Library of Munich, Germany.

    More about this item

    Keywords

    social inequality; income inequality; income distribution; economic growth;
    All these keywords.

    JEL classification:

    • B55 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Social Economics
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

    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:mnb:finrev:v:22:y:2023:i:4:p:136-159. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Morvay Endre (email available below). General contact details of provider: https://edirc.repec.org/data/mnbgvhu.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.