Effects of Income Inequality on Aggregate Output

This paper estimates the effect of income inequality on real gross domestic product per capita using a panel of 104 countries during the period 1970–2010. The empirical analysis addresses endogeneity issues by using instrumental variables estimation and controlling for country and time fixed effects. The analysis finds that, on average, income inequality has a significant negative effect on transitional gross domestic product per capita growth and the long-run level of gross domestic product per capita. However, the impact varies by the level of economic development, so much so that in poor countries income inequality has a significant positive effect on gross domestic product per capita.

Bibliographic Details

Main Authors:	Brueckner, Markus, Lederman, Daniel
Format:	Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2015-06
Subjects:	INDUSTRIALIZED COUNTRIES, INCOME SHARE, GOVERNMENT EXPENDITURES, ECONOMIC GROWTH, CAPITAL ACCUMULATION, INCOME, INDIVIDUAL COUNTRIES, INCOME QUINTILES, ECONOMETRIC MODEL, REAL GDP, GDP PER CAPITA, ECONOMIC REVIEW, DEVELOPING COUNTRIES, EMPIRICAL LEVEL, POLICY CIRCLES, FISCAL POLICY, POLICY DISCUSSIONS, VARIABLES, EMPIRICAL STUDIES, LAGGED VALUES, MARGINAL EFFECT, WEALTH, MEASURES, EMPIRICAL LITERATURE, INSTRUMENTS, INCOME INEQUALITY DATA, EMPIRICAL ANALYSIS, DEVELOPMENT, MARKET IMPERFECTIONS, STANDARD DEVIATION, EMPIRICAL RESULTS, DEVELOPMENT ECONOMICS, EDUCATIONAL ATTAINMENT, FOREIGN AID, ECONOMICS OF EDUCATION, DESCRIPTIVE STATISTICS, INCOME INEQUALITY, DATA QUALITY, SIGNIFICANCE LEVEL, SIGNIFICANT NEGATIVE, ECONOMETRICS, PER CAPITA GROWTH, GROSS DOMESTIC PRODUCT PER CAPITA, NEGATIVE COEFFICIENT, INDICATORS, LAND OWNERSHIP, PRODUCT, RELATIVE PRICES, GROSS DOMESTIC PRODUCT, TAXES, CONSUMPTION, HUMAN CAPITAL, CREDIT MARKET IMPERFECTIONS, EXPLANATORY VARIABLE, COUNTRY LEVEL, CAPITAL, ECONOMIC STUDIES, ESTIMATED COEFFICIENT, VALUE, DEPENDENT VARIABLE, LAND INEQUALITY, CREDIT, MACROECONOMICS, POOR COUNTRIES, NATIONAL INCOME, DYNAMIC PANEL, INEQUALITY DATA, NEGATIVE EFFECT, INCOME DISTRIBUTION, INCOMES, ESTIMATED COEFFICIENTS, AGGREGATE OUTPUT, ERROR TERM, SECONDARY SCHOOLING, ECONOMIC THEORY, ECONOMICS, EMPIRICAL RESEARCH, LAGGED DEPENDENT, FIXED EFFECTS, DATA SETS, ECONOMIC DEVELOPMENT, POSITIVE EFFECT, TRADE, RICH COUNTRIES, GDP, DATA SET, THEORY, CROSS-COUNTRY DIFFERENCES, WAR, INVESTMENT, INCOME SHARES, POVERTY, GINI COEFFICIENT, EMPIRICAL EVIDENCE, DISTRIBUTION OF WEALTH, POLICY RESEARCH, RISING INEQUALITY, POOR, CAPITAL INVESTMENT, DEVELOPMENT INDICATORS, INTERNATIONAL COMPARISONS, MIDDLE INCOME COUNTRIES, INEQUALITY COEFFICIENT, LONG RUN, INCOME LEVEL, CREDIT MARKET, DEVELOPMENT POLICY, INEQUALITY, GROWTH,
Online Access:	http://documents.worldbank.org/curated/en/2015/06/24679226/effects-income-inequality-aggregate-output http://hdl.handle.net/10986/22203
Tags:	Add Tag No Tags, Be the first to tag this record!