Growth, Inequality and Poverty Relationships

No 1338, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper examines the causal relationship between inequality and a number of macroeconomic variables frequently found in the inequality and growth literature. These include growth, openness, wages, and liberalisation. We review the existing cross-country empirical evidence on the effects of inequality on growth and the extent to which the poorest in society benefit from economic growth. The linkage between growth, redistribution and poverty is also analysed. In the review of literature mainly empirical examples from 1990s are taken. In addition we test the conditional and unconditional relationship between inequality and growth in the post World War II period using WIDER inequality database. Regression results suggest that income inequality is declining over time. Inequality is also declining in growth of income. There is a significant regional heterogeneity in the levels and development over time. The Kuznets hypothesis represents a global U-shape relationship between inequality and growth.

Keywords: openness; income inequality; wage inequality; poverty; indices; growth (search for similar items in EconPapers)
JEL-codes: C23 D63 F14 O40 O57 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2004-10
New Economics Papers: this item is included in nep-dev
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Citations: View citations in EconPapers (10)

Published - published in: A. Heshmati ; A. Tausch (eds.), Roadmap to Bangalore? Globalization, the EU Lisbon Process and the Structure of Global Inequality, Hauppauge and New York, 2007, 109-137

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