Assessing the Impact of Income Inequality on Economic Growth, http://www.ceelbas.ac.uk/dpu/k_s/publications/working_papers/f-j/WP119.pdf, http://www.ncert.nic.in/programmes/education_survey/pdfs/Enrolment_in_school.pdf, http://www.igidr.ac.in/pdf/publication/WP-2012-013.pdf, http://planningcommission.nic.in/data/datatable/data_2312/comp_data2312.pdf, Income Disparity Trends and Data Problems in Singapore: Some Myths and Realities, Democracy, Government Spending and Economic Growth: The Case of Ghana, 1960–2008, Margin: The Journal of Applied Economic Research, The Dynamics of Insurance Development and Economic Growth in Nigeria, Bertola, G., Foellmi, R., Zweimüller, J. The results in this paper, when regressing Gini to GDP In particular, what matters most is the gap between low income households and the rest of the population. The level of income inequality is one of the main economic concerns for economists as it is directly related to poverty and also has significant effect on economic growth: Assuming that the average level of income per capita maintains constant in a country, a higher degree of income inequality will mean that poor people are worse off. Find out about Lean Library here, If you have access to journal via a society or associations, read the instructions below. HuffPost is part of Verizon Media. This work finds that countries where income inequality is decreasing grow faster than those with rising inequality. Downloadable! In 1980, the per capita income of the 15 richest nations was 44 times that of the 15 poorest, by 2000, that multiple had increased to 62. At present, one understanding of this relationship is that given by what Oded Galor called the ‘modern perspective’, which, pointing the direction of causation from income inequality to economic growth asserts that the former imposes a significantly negative influence on the latter. A recent report by Standard & … In other words, if those people with a higher level of education have higher productivity, differences in the rate of return will encourage more people to attain a higher level of education. Income growth has been most rapid for the top 5% of families. Reopening the convergence debate: A new look at cross-country growth empirics, New ways of looking at old issues: Inequality and growth, Fertility, education and development: Evidence from India, A reassessment of the relationship between inequality and growth, Inequality and economic development: An overview, From physical to human capital accumulation: Inequality and the process of development, The distribution of human capital and economic growth, Department of Economics, Hebrew University, Indian Council for Research on International Economic Relations, The effect of inequality on growth: Theory and evidence from Indian states, Annual World Bank Conference on Development Economics, The World Bank Development Research Group, Is inequality harmful for growth? The matter may not be entirely settled, however, as an opposing viewpoint suggests that income inequality does not harm economic opportunity. Despite the firm consensus that income inequality is intrinsically undesirable, its impact on economic growth is much disputed. LITERATURE REVIEW The impact of Income Inequality on Economic Growth: A Case study on Nigeria Student Number: P14173106 Supervisor: Helen Solomon Module Leader: Helen Solomon Date: 26th November 2016 Word Count: 1.0 Introduction According to Adam Smith (1776) in his book the wealth of nations, “no society can surely be flourishing and happy, of which the far greater part of the members … There's a continuing debate as to the broader impact of income inequality. Information about your device and internet connection, including your IP address, Browsing and search activity while using Verizon Media websites and apps. Secondary data were gathered from Eurostats, World Bank and OECD national account for a 13-year period annually (2006-2018). In 1979, the Chinese government introduced several new programs designed to stimulate the economy. econometric analysis suggests that income inequality has a negative and statistically significant impact on subsequent growth. The number of patents granted is chosen to … Today, the richest 10 per cent of the population in the OECD area earn 9.5 times the income of the poorest 10 per cent; in the 1980s this ratio stood at 7:1 and has been rising continuously ever since. Comment, Growth, income distribution, and democracy: What the data say, Poverty and economic growth: Trickle Down peters Out, Income distribution and socio-political instability as determinants of savings: A cross-sectional model. The working paper, Trends in income inequality and its impact on economic growth, is part of the OECD’s New Approaches to Economic Challenges Initiative, an Organisation-wide reflection on the roots and lessons to be learned from the global economic crisis, as well as an exercise to review and update its analytical frameworks. Using a novel empirical framework, Hermansen et al. Login failed. The email address and/or password entered does not match our records, please check and try again. The paper also aims to find out the spatial impact of economic growth on income inequality of the neighbouring counties. The talk about inequality has turned from ethical issues (should the rich be so rich) to economic impacts, such as whether inequality means economic stagnation. The e-mail addresses that you supply to use this service will not be used for any other purpose without your consent. The empirical model The empirical equation is: At present, one understanding of this relationship is that given by what Oded Galor called the ‘modern perspective’, which, pointing the direction of causation from income inequality to economic growth asserts that the former … Create a link to share a read only version of this article with your colleagues and friends. The impact of fiscal policy variables on economic growth and income inequality is estimated with data from a balanced panel of 19 high-income OECD countries for 1995–2015. Why economic growth may not reduce income inequality. Some society journals require you to create a personal profile, then activate your society account, You are adding the following journals to your email alerts, Did you struggle to get access to this article? Impact of Economic Growth on Income Inequality: A Regional Perspective Shibalee Majumdar and Mark Partridge Egalitarianism refers to the doctrine of the equality of mankind and the desirability of political, economic and social equality. (, Ostry, J. D., Andrew, B., Tsangarides, C. D. (, Thornton, J. R., Agnello, R. J., Link, C. R. (. Members of _ can log in with their society credentials below. Downloadable! The talk about inequality has turned from ethical issues (should the rich be so rich) to economic impacts, such as whether inequality means economic stagnation. Some studies have found a positive relationship, others a negative relationship while some found no correlation between the two Click the button below for the full-text content, 24 hours online access to download content. (2016) shed new light on the old growth and inequality nexus by assessing the impact of growth on household incomes across the distribution, that is, progressively encompassing poor, middle class and rich households. Regardless of the relationship between inequality and economic growth, the high level of inequality that we have today requires a policy response leading to a … Contact us if you experience any difficulty logging in. The Benefits of Economic Inequality. By continuing to browse This site uses cookies. In the empirical part, indices for absolute and relative product diversity are calculated from ICP‐expenditure data. Recent research has re-focused attention on the impact of income inequality on economic growth. Theoretically, it can be argued that there is a negative relationship between the Gini coefficient and economic growth, but evidence shows that it is not always the case. The impact of Gender inequality on Economic Growth October 2014 Conference: The Accounting, Economics and Financial Management Conference 26-27 October 2014, Tehran, Iran Financial development, trade openness as a proxy of globalization, inflation, human capital formation, and fiscal policy are utilized as major control variables. Modern economies are creating an increased number of part-time/flexible service sector jobs. Using a novel empirical framework, Hermansen et al. The impact of Gender inequality on Economic Growth October 2014 Conference: The Accounting, Economics and Financial Management Conference 26-27 October 2014, Tehran, Iran This article reason, there is no single answer to the growth and inequality question ( 2002 ) the... Low income households and the Mississippi Delta counties was applied to SWIID data G20... 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