IDEAS home Printed from https://ideas.repec.org/a/hur/ijarbs/v7y2017i6p73-88.html
   My bibliography  Save this article

Long Run Relationship between Income Inequality and Economic Growth: Evidence from Malaysia

Author

Listed:
  • Nor Fatimah Che Sulaiman
  • Ishak Yussof
  • Mohd Azlan Shah Zaidi
  • Noorasiah Sulaiman

Abstract

The aim of present study is to investigate the existence of a long run relationship between income inequality and economic growth in Malaysia. The study has employed annual time series data over the period of 1970 up to 2014. This study is conducted by utilizing the Autoregressive Distributive Lag (ARDL) techniques. ARDL bounds testing approach has been used for cointegration and error correction method (ECM). The unit root problem is handled by the use of ADF unit root test. The findings of our analysis are contrasted to the significant association between income inequality and economic growth found by Alesina and Roderick (1994) and by Persson and Tabellini (1994). To the best of our knowledge, this study seems to be a good and unique contribution in literature with reference to Malaysia. This study is one of pioneering attempt that employs ARDL cointegration approach for this income inequality issue in Malaysia.

Suggested Citation

  • Nor Fatimah Che Sulaiman & Ishak Yussof & Mohd Azlan Shah Zaidi & Noorasiah Sulaiman, 2017. "Long Run Relationship between Income Inequality and Economic Growth: Evidence from Malaysia," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 7(6), pages 73-88, June.
    • Handle: RePEc:hur:ijarbs:v:7:y:2017:i:6:p:73-88
    as

    Download full text from publisher

    File URL: http://hrmars.com/hrmars_papers/Long_Run_Relationship_between_Income_Inequality_and_Economic_Growth_Evidence_from_Malaysia1.pdf
    Download Restriction: no
    File URL: http://hrmars.com/hrmars_papers/Long_Run_Relationship_between_Income_Inequality_and_Economic_Growth_Evidence_from_Malaysia1.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Pesaran, M. H. & Shin, Y. & Smith, R. J., 1996. "Testing for the 'Existence of a Long-run Relationship'," Cambridge Working Papers in Economics 9622, Faculty of Economics, University of Cambridge.
    2. Robert C. Feenstra & Gordon H. Hanson, 1999. "The Impact of Outsourcing and High-Technology Capital on Wages: Estimates For the United States, 1979–1990," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 907-940.
    3. Sanjaya Lall, 1985. "Multinationals, Technology and Exports," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-17952-7.
    4. Robert C. Feenstra & Gene M. Grossman & Douglas A. Irwin (ed.), 1996. "The Political Economy of Trade Policy: Papers in Honor of Jagdish Bhagwati," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061864, December.
    5. Feenstra, Robert C., 2003. "A homothetic utility function for monopolistic competition models, without constant price elasticity," Economics Letters, Elsevier, vol. 78(1), pages 79-86, January.
    6. Markusen, James R. & Venables, Anthony J., 1999. "Foreign direct investment as a catalyst for industrial development," European Economic Review, Elsevier, vol. 43(2), pages 335-356, February.
    7. Jakob Munch & Jan Skaksen, 2009. "Specialization, outsourcing and wages," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(1), pages 57-73, April.
    8. Mark D. Partridge, 2006. "The Relationship between Inequality and Labor Market Performance: Evidence from U.S. States," Journal of Labor Research, Transaction Publishers, vol. 27(1), pages 1-20, January.
    9. Joseph E. Stiglitz, 1999. "More instruments and broader goals: moving toward the Post-Washington Consensus," Brazilian Journal of Political Economy, Center of Political Economy, vol. 19(1), pages 101-128.
    10. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    11. Rajan, Keertichandra & Kennedy, Jonathan & King, Lawrence, 2013. "Is wealthier always healthier in poor countries? The health implications of income, inequality, poverty, and literacy in India," Social Science & Medicine, Elsevier, vol. 88(C), pages 98-107.
    12. Angeles-Castro, Gerardo, 2006. "The relationship between economic growth and inequality: evidence from the age of market liberalism," Proceedings of the German Development Economics Conference, Berlin 2006 2, Verein für Socialpolitik, Research Committee Development Economics.
    13. James Laurenceson & Joseph C.H. Chai, 2003. "Financial Reform and Economic Development in China," Books, Edward Elgar Publishing, number 2714.
    14. Mark D. Partridge, 2005. "Does Income Distribution Affect U.S. State Economic Growth?," Journal of Regional Science, Wiley Blackwell, vol. 45(2), pages 363-394, May.
    15. Sylwester, Kevin, 2000. "Income inequality, education expenditures, and growth," Journal of Development Economics, Elsevier, vol. 63(2), pages 379-398, December.
    16. Mohsen Bahmani-Oskooee & Raymond Chi Wing Ng, 2002. "Long-Run Demand for Money in Hong Kong: An Application of the ARDL Model," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 1(2), pages 147-155, August.
    17. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, vol. 66(4), pages 281-281.
    18. Gerardo Angeles-Castro, 2006. "The Relationship Between Economic Growth and Inequality: Evidence from the Age of Market Liberalism," Studies in Economics 0601, School of Economics, University of Kent.
    19. Gerardo Angeles-Castro, 2006. "The relationship between economic growth and inequality: evidence from the age of market liberalism," DEGIT Conference Papers c011_009, DEGIT, Dynamics, Economic Growth, and International Trade.
    20. Kevin Sylwester, 2005. "Foreign direct investment, growth and income inequality in less developed countries," International Review of Applied Economics, Taylor & Francis Journals, vol. 19(3), pages 289-300.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nurrachmi, Rininta & Duasa, Jarita & ariffin, muhammad irwan & afroz, rafia, 2024. "The Nexus Between Income Inequality and Environmental Degradation in ASEAN-6 Countries During 1992 – 2015 from Islamic Perspective," MPRA Paper 121513, University Library of Munich, Germany.

    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. Muhammad Shahbaz, 2010. "Income inequality‐economic growth and non‐linearity: a case of Pakistan," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 37(8), pages 613-636, July.
    2. RIDZUAN, Abdul Rahim & NOOR, Abdul Halim Mohd & AHMED, Elsadig Musa, 2014. "To What Extent Are The Social Inequality Impacts Of Fdi In The Selected Asean?," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 14(1), pages 189-202.
    3. Ansgar Belke & Thorsten Polleit, 2006. "Monetary policy and dividend growth in Germany: long-run structural modelling versus bounds testing approach," Applied Economics, Taylor & Francis Journals, vol. 38(12), pages 1409-1423.
    4. Imimole Benedict, 2014. "An Examination of the Stability of Narrow Money Demand Function in Nigeria," Journal of Empirical Economics, Research Academy of Social Sciences, vol. 3(4), pages 252-260.
    5. Eric S. Lin & Hamid E. Ali, 2009. "Military Spending and Inequality: Panel Granger Causality Test," Journal of Peace Research, Peace Research Institute Oslo, vol. 46(5), pages 671-685, September.
    6. Jalil, Mohammad Muaz, 2009. "Re-examining Kuznets Hypothesis: Does Data Matter?," MPRA Paper 72557, University Library of Munich, Germany.
    7. Helal Uddin & Md. Hasanur Rahman & Shapan Chandra Majumder, 2022. "The impact of agricultural production and remittance inflows on economic growth in Bangladesh using ARDL technique," SN Business & Economics, Springer, vol. 2(4), pages 1-25, April.
    8. Hisham Handal Abdelbaki, 2013. "Causality Relationship between Macroeconomic Variables and Stock Market Development: Evidence from Bahrain," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 7(1), pages 69-84.
    9. Hwang, Jen-Te & Wen, Min, 2024. "Electronic payments and money demand in China," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 47-64.
    10. Mallick, Hrushikesh & Mahalik, Mantu Kumar & Sahoo, Manoranjan, 2018. "Is crude oil price detrimental to domestic private investment for an emerging economy? The role of public sector investment and financial sector development in an era of globalization," Energy Economics, Elsevier, vol. 69(C), pages 307-324.
    11. Imtiaz Arif, Ather Iqbal, Syed Farasat Ali, Amna Sohail, 2017. "International Stock Market Diversification among BRICS-P: A Cointegration Analysis," Journal of Management Sciences, Geist Science, Iqra University, Faculty of Business Administration, vol. 4(2), pages 269-285, October.
    12. Alam, Shaista & Ahmed, Qazi Masood, 2012. "Exchange Rate Volatility and Aggregate Exports Demand through ARDL Framework: An Experience from Pakistan Economy," Review of Applied Economics, Lincoln University, Department of Financial and Business Systems, vol. 8(1), pages 1-16, February.
    13. Ansgar Belke & Thorsten Polleit, 2005. "(How) Do Stock Market Returns React to Monetary Policy? - An ARDL Cointegration Analysis for Germany," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 253/2005, Department of Economics, University of Hohenheim, Germany.
    14. Caroline DAYMON & Céline GIMET, 2007. "Les Déterminants De L Inégalite Et Le Rôle De L Équité Dans Les Pays Du Moyen-Orient Et D Afrique Du Nord," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 25, pages 11-26.
    15. Ijaz Rehman & Nurul Mahdzan & Alexandru Trifu & Muhammad Bilal, 2014. "A cointegration approach to modeling human capital formation, self-employment, and economic growth: evidence from Pakistan," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(3), pages 1439-1453, May.
    16. Muhammad SHAHBAZ, 2009. "On Nominal and Real Devaluations Relation: An Econometric Evidence for Pakistan," International Journal of Applied Econometrics and Quantitative Studies, Euro-American Association of Economic Development, vol. 9(1).
    17. Kalaichelvi Ravinthirakumaran & Navaratnam Ravinthirakumaran, 2018. "The impact of foreign direct investment on income inequality: a panel Autogressive Distributed Lag approach for the Asia-Pacific Economic Cooperation developing economies," Asia-Pacific Sustainable Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 25(1), pages 57-84, June.
    18. Gerardo Angeles-Castro, 2007. "Factors Driving Changes in Income Distribution in Post-Reform Mexico," Studies in Economics 0706, School of Economics, University of Kent.
    19. Muhammad Shafiullah & Ravinthirakumaran Navaratnam, 2016. "Do Bangladesh and Sri Lanka Enjoy Export-Led Growth? A Comparison of Two Small South Asian Economies," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 17(1), pages 114-132, March.
    20. Alexander Hijzen & Sébastien Jean & Thierry Mayer, 2011. "The effects at home of initiating production abroad: evidence from matched French firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(3), pages 457-483, September.

    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:hur:ijarbs:v:7:y:2017:i:6:p:73-88. 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: Hassan Danial Aslam (email available below). General contact details of provider: http://hrmars.com/index.php/pages/detail/IJARBSS .

    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.