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Income Inequality and Economic Growth in the U.S. :A Panel Cointegration Approach

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  • Mark W. Frank

    (Department of Economics and International Business, Sam Houston State University)

Abstract

The purpose of this paper is to examine the empirical relationship between income inequality and economic growth using U.S. state-level data during the post-war period. We construct a sample of 48 U.S. states with annual observations over the period 1945 to 2001. With this sample the number of time series observations is relatively large and of the same order of magnitude as the number of groups. This allows for the exploitation of new cointegrated dynamic panel data techniques. Our findings indicate that the long-run relationship between inequality and growth is negative in nature, though this negative relationship appears to be larger for low-income states.

Suggested Citation

  • Mark W. Frank, 2005. "Income Inequality and Economic Growth in the U.S. :A Panel Cointegration Approach," Working Papers 0503, Sam Houston State University, Department of Economics and International Business.
    • Handle: RePEc:shs:wpaper:0503
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    References listed on IDEAS

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    Cited by:

    1. Cássio Da Nóbrega Besarria & Jevuks Matheus De Araújo & Andréa Ferreira Da Silva & Éryka Fernanda Miranda Sobral & Thiago Geovane Pereira, 2018. "Effects Of Income Inequality On The Economic Growth Of Brazilian States: An Analysis Using The Cointegrated Panel Model," Anais do XLIV Encontro Nacional de Economia [Proceedings of the 44th Brazilian Economics Meeting] 81, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    2. Cole, Ismail M., 2014. "Short- and long-term growth effects of special interest groups in the U.S. states: A dynamic panel error-correction approach," MPRA Paper 54455, University Library of Munich, Germany, revised 02 Mar 2014.
    3. Muhammad, Shahbaz & Faridul, Islam & Muhammad Sabihuddin, Butt, 2011. "Devaluation and income inequality: Evidence from Pakistan," MPRA Paper 35522, University Library of Munich, Germany, revised 21 Dec 2011.
    4. Afees A. Salisu & Kazeem Isah, 2017. "A Capital Flight-Growth Nexus in Sub-Saharan Africa: The Role of Macroeconomic Uncertainty," Working Papers 034, Centre for Econometric and Allied Research, University of Ibadan.
    5. F. Chen & X. Sun, 2014. "Urban-rural income polarization and economic growth in China: evidence from the analysis of a dynamic panel data model," Applied Economics, Taylor & Francis Journals, vol. 46(32), pages 4008-4023, November.
    6. Muhammad Shahbaz & Faridul Islam & Muhammad Sabihuddin Butt, 2013. "Devaluation and Income Inequality Nexus: Evidence from Pakistan," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 1(4), pages 48-58, April.
    7. Edward F. Blackburne III & Mark W. Frank, 2007. "Estimation of nonstationary heterogeneous panels," Stata Journal, StataCorp LP, vol. 7(2), pages 197-208, June.
    8. 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.

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