Inequality, Poverty, and Growth : Cross-Country Evidence

This paper examines the empirical relationship between inequality and growth, and analyzes the impacts of growth, inequality, and government spending on poverty reduction. A new panel dataset has been assembled on inequality and poverty that reduces measurement error and ensures comparability across countries and over time. The empirical results in this paper challenge the belief that income inequality has a negative effect on growth and confirm the validity of the Kuznets curve. Credit market imperfections in low- and medium-income countries are identified as the likely reason for the positive link between inequality and growth over the short-to-medium term. In the long term, inequality may have an adverse impact on growth.
Publication date: February 2005
ISBN: 9781451860474
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Topics covered in this book

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Development - Economic Development , Development - Economic Development , Inequality , growth , public expenditure , per capita income , economic growth , gini index , real gdp , gdp growth , Economic Growth and Aggregate Productivity: General , Financial Institutions and Services: General , and public expenditure

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