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On the relation between income distribution and economic growth

Author

Listed:
  • Mohsen Bahmani-Oskooee
  • Abera Gelan

Abstract

Most of the research on the relation between economic growth and income distribution has concentrated on the well-known Kuznets inverted-U hypothesis which claims that economic growth initially worsens income inequality and then it improves it. A few studies have argued that income inequality could also affect economic growth through its impact on saving and investment. In this paper, we use time-series data from 18 developing countries along with the bounds testing approach and investigate bi-directional causality between economic growth and a measure of income inequality. We find that while there is short-run bi-directional causality in most countries, the long-run causality is limited to less than half of the countries in the sample.

Suggested Citation

  • Mohsen Bahmani-Oskooee & Abera Gelan, 2012. "On the relation between income distribution and economic growth," Global Business and Economics Review, Inderscience Enterprises Ltd, vol. 14(4), pages 249-273.
    • Handle: RePEc:ids:gbusec:v:14:y:2012:i:4:p:249-273
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    Citations

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    Cited by:

    1. Bahmani-Oskooee, Mohsen & Ardakani, Amid, 2020. "Does GINI respond to income volatility in an asymmetric manner? Evidence from 41 countries," Economic Systems, Elsevier, vol. 44(2).
    2. Bahmani-Oskooee, Mohsen & Motavallizadeh-Ardakani, Amid, 2018. "On the effects of income volatility on income distribution: Asymmetric evidence from state level data in the U.S," Research in Economics, Elsevier, vol. 72(2), pages 224-239.
    3. Mohsen Bahmani-Oskooee & Mehrnoosh Hasanzade, 2020. "Asymmetric Link between U.S. Tariff Policy and Income Distribution: Evidence from State Level Data," Open Economies Review, Springer, vol. 31(4), pages 821-857, September.
    4. Mohsen Bahmani‐Oskooee & Mehrnoosh Hasanzade, 2022. "Policy uncertainty and income distribution: Asymmetric evidence from state‐level data in the United States," Bulletin of Economic Research, Wiley Blackwell, vol. 74(1), pages 179-220, January.
    5. Bahmani-Oskooee, Mohsen & Motavallizadeh-Ardakani, Amid, 2018. "Exchange rate changes and income distribution in 41 countries: Asymmetry analysis," The Quarterly Review of Economics and Finance, Elsevier, vol. 68(C), pages 266-282.

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