Inequality and growth same politics same results?
Panel data analysis (1950-2016)
Keywords:
Inequality, Macroeconomics, Income Distribution, Economic Growth;, GINIAbstract
The impact of income distribution inequality,
measured through the GINI coefficient, on the growth of Gross Domestic Product per capita for a panel of 206 individuals (countries and dependent territories) between 1950 and 2016 is analyzed using the Generalized Method of Moments
(Arellano-Bover 1995). The results indicate that GINI is a significant variable to explain GDP growth per capita only
when observed in quadratic terms. That is, the effect is not linear but would have an inverted U shape. When presenting
this type of relationship we find an optimal GINI value, where its effect on the explained variable is maximum. This result
brings new elements to the research that helps to determine whether equality in income distribution has a direct relationship with the country’s product growth or not and in what way it does.
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