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Impact of Income Inequality on Economic Growth: The Case of Taiwan and Policy Implications

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  • Yu Hsing

    (Economics, Department of Gen. Business, SLU 10813, College of Business and Technology, Southern Louisiana University, Hammond, LA 70402.)

Abstract

In this paper, a classical K-L production function augmented with human capital and technological progress to estimate the effect of income inequality on economic growth in Taiwan has been employed. The generalised autoregressive conditional heteroskedasticity (GARCH) and/ or ARCH models have been applied to estimate regression parameters. The research findings suggest that a higher Gini coefficient deteriorates economic growth. When measured by the ratio of the highest fifth’s income to the lowest fifth’s income, the negative relationship between inequality and economic growth is also confirmed. Other results are consistent with the economic theories: growth in employment, human capital investment, and R and D spending all contributing to economic growth.

Suggested Citation

  • Yu Hsing, 2004. "Impact of Income Inequality on Economic Growth: The Case of Taiwan and Policy Implications," Journal of Social and Economic Development, Institute for Social and Economic Change, Bangalore, vol. 6(2), pages 194-204, July-Dece.
    • Handle: RePEc:sch:journl:v:6:y:2004:i:2:p:194-204
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    File URL: http://www.isec.ac.in/JSED_v6_i1_194-204.pdf
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    Cited by:

    1. Adnen Ben Nasr & Mehmet Balcilar & Rangan Gupta & Seyi Saint Akadiri, 2018. "Asymmetric Effects of Inequality on Per Capita Real GDP of the United States," Working Papers 201820, University of Pretoria, Department of Economics.
    2. Adnen Ben Nasr & Mehmet Balcilar & Rangan Gupta & Seyi Saint Akadiri, 2020. "Asymmetric effects of inequality on real output levels of the United States," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 10(1), pages 47-69, March.

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