Inequality and growth: evidence from panel cointegration |
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Authors: | Dierk Herzer Sebastian Vollmer |
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Affiliation: | 1. Schumpeter School of Business and Economics, University of Wuppertal, Gau?str. 20, 42119, Wuppertal, Germany 2. Center for Population and Development Studies, Harvard University, 9 Bow Street, Cambridge, MA, 02138, USA 3. Institute of Macroeconomics, University of Hannover, Hannover, Germany 4. Development Economics Research Group, University of G?ttingen, G?ttingen, Germany
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Abstract: | This paper uses heterogeneous panel cointegration techniques to estimate the long-run effect of income inequality on per-capita income for 46 countries over the period 1970–1995. We find that inequality has a negative long-run effect on income, both for the sample as a whole and for important sub-groups within the sample (developed countries, developing countries, democracies, and non-democracies). The effect is economically important, with a magnitude about half as high as the magnitude of an increase in the investment share. |
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