Inequality and Growth in a Panel of Countries

“Finally, to reduce any omitted variable bias, we incorporate more control variables suggested by the previous literature, such as Barro (2000) and others such as domestic investment (GDI) as a share of GDP as a proxy for the country’s average domestic capital (K), and population growth, which is an…”

“Finally, some researchers also support the neutral relationship between inequality and growth (Barro, 2000).”

“This contradicts the conventional wisdom that inequality is acceptable for economic growth when it occurs quickly (Goldberg and Pavcnik 2004, p. 8), for efficiency (Okun 2015), for innovation and entrepreneurship (Lazear and Rosen 1981), and education (Barro 2000).”

“Barro (2000) stated that investment affects reducing income inequality between regions.”

“The Kuznets curve shows that the tradeoff between income inequality and economic growth depends on different stages of economic development (see, e.g., Kuznets (1955) and Barro (2000)).”

“…hypothesis more rigorously, I test the presence of the Kuznets curve in Brazil with regression analysis (Ahluwalia 1976; Deininger and Squire 1998; Barro 2000; Williamson 2010; Milanovic 2018), as well as on the basis of inequality time series and on the evolution of inequality against…”

“In short, the higher the income inequality and the higher savings rates, the greater the investments and the higher the economic growth rates (Barro, 2000, p. 8).”

“The growing economic integration can also accelerate the distributive effects of skill biased technological change on inequality (Barro, 2000) since it can boost the adoption of new technologies and the demand for skill labour.”

“Increases in inequality harm economic growth and undermine social cohesion (Alesina and La Ferrara, 2002; Barro, 2000; Kawachi et al., 1997).”

“On the other hand, Barro (2000) is unable to corroborate this result, but does find evidence supporting the Kuznets curve.”

“This set includes i) GDP per capita, to account for the non-linear relationship between inequality and the level of development (Kuznets, 1955; Barro, 2000); ii) government spending as a share of GDP taken as a proxy for redistributive policies (Perotti, 1992; DablaNorris et al., 2015); iii) the…”

“…by now an extensive and rich literature on the relationship between inequality and economic growth that has been carefully and thoroughly surveyed by Benabou (1996), Perotti (1996), Aghion et al. (1999), Barro (2000), Bertola et al. (2006), García-Peñalosa (2008), and Ehrhart (2009), among others3.”

“However, Benhabib and Spiegel (2000), Forbes (2000) and Li and Zou (1998), who employed fixed effects estimates found a positive relationship between changes in inequality and changes in the growth.”

“Barro (2000), on the other hand, finds no overall relation between income inequality and growth, but rather that inequality retards growth in poor countries and stimulates growth in richer countries.”

“Numerous empirical studies have examined the relation between inequality and economic growth, yielding disparate results: one type of result is evidence of a negative relation between inequality and economic growth (e.g., Alesina and Rodrik 1994; Persson and Tabellini 1994; Perotti 1996; Easterly 2001); another type o…”

“…of openness are introduced as regressors in crosscountry or time-series regressions (Higgins and Williamson, 1999; Spilimbergo et al., 1999; Barro, 2000); (ii) the decomposition approach where income and population data are used to compute different inequality indices over time and total…”

“In addition, panel studies such as the one performed by Barro (2000) have found that the relationship between inequality and growth is not robust to the use of different control variables, and Banerjee and Duflo(2003), based on the data they examine, find little relationship between inequality and…”

“: Os valores entre parênteses representam o desvio padrão Barro (2000) observa que retirar efeitos fixos exacerba o problema de erro de medida, especialmente para uma variável como o coeficiente de Gini, para a qual variações entre países é mais importante do que variações ao longo do tempo.”

“Barro (2000) finds a detrimental effect of inequality for developing countries, but not so for industrialized countries.”

“They are: real GDP per capita (PPP) and its rate of growth (Barro 2000; White and Anderson 2001; Panizza 2002; Anderson et al. 2003), both taken from the Total Economy Database provided by the Conference Board; the fertility rate and the age dependency ratio for capturing demographic issues, which…”

“…often the following: minimum wage (Litwin, 2015) [25]; human capital theory (Shapiro, 2006) [26]; issues related to globalization and development (Barro, 2000; Piketty, 2015; Mihaylova, 2016) [27–29]; technological progress (Kharlamova et al., 2018) [30]; the quality of institutions (Acemoglu…”

“A second theory is based on the idea that inequality leads to sociopolitical conflict, which in turn reduces the security of property rights, thereby discouraging the accumulation of capital (on distributional conflicts, see Alesina and Rodrik 1994; Persson and Tabellini 1994; Barro 2000).”

“174 Sabur, Khusaini, & Ramdani, Education equality and economic growth in Indonesia Research finding the correlation between income inequality with less convincing economic growth was also carried out (Barro, 2000).”

“…however, challenged this hypothesis and several empirical studies found no significant relationship between inequality and per capita income (Barro, 2000); Li, Squire, & Zou, 1998); Todaro & Smith, 2009), Sarel (1997), examined the relationship between income inequality and macroeconomic…”

“We use panel data for Brazilian states from 1995 to 2009 to analyse the impact of economic growth and income inequality on poverty change in Brazil, seeking to evaluate the Bourguignon (2003) hypothesis that the more unequal a country is, the less effective economic growth will be at reducing poverty.”

“Despite the high number of literature on the nexus between inequality and economic growth (Angeles-Castro, 2006; Barro, 2000; Cingano, 2014; Galbraith, 2012; Heyse, 2006; Jihène & Ghazi, 2013; Tabassum & Majeed, 2008; Wahiba & El Weriemmi, 2014), there have been inconsistencies in empirical…”

“(Barro (2000), makes an attempt at classifying them.”

“Others view it as intrinsically desirable because the existing income inequality is perceived to be the outcome of unfair access to resources and, thus, detrimental to social cohesion (Barro, 2000; Forbes, 2000).”

“More recent work has sometimes borne out this result (Barro 2000).”

“Deninger & Squire (1998), first, and then Forbes (2000) and Barro (2000), found that inequality could have either statistically significant negative or positive impacts on development.”

“87-89), early microsimulation studies were mainly focused on wage distributions: Almeida dos Reis and Paes de Barros (1991) considered the effect of education on wage distribution in Brazil; Juhn et al.”

“However, the results indicate that rising inequality is neither a part of the inevitable Kuznets curve, nor a part of the empirical regularity found by Barro (2000).”

“However, more recent studies have given further support to the law (Barro, 2000)8.”

“Several empirical studies found supportive evidence that openness reduces inequality in developing regions (e.g., Barro 2000; Calderón and Chong 2001; Ravallion 2004; Zhu and Trefler 2005; Gourdon et al. 2008; Bittencourt et al. 2010; Cicowiez et al. 2010; Jaumotte et al. 2013; Chao et al. 2019).”

“…the PT2, the income inequality will be the largest, and later, because Outside the urban areas Inequality and economic growth 277 the region 4 is also involved the scope of urban, the income inequality will reduce, that is to say, the Kuznets curve is a clear empirical regularity (Barro, 2000).”

“In particular, most found that the relationship was positive in high-income countries and negative in low-income countries (Deininger & Squire, 1998; Barro, 2000; Voitchovsky, 2005; Castelló-Climent, 2010; Fawaz et al., 2014; Halter et al., 2014; Ostry et al., 2014 and Brueckner & Lederman, 2018).”

“The initial consensus was that inequality could be a growth or growth inhibitor depending on various factors [6].”

“Model (1) borrows from Barro (2000) and Lundberg and Squire (2003), who study economic growth and income inequality determinants.”

“Income inequality depends on income dynamics (Kuznets, 1955; Barro, 2000), inflation (Beetsma andVan der Ploeg, 1996), business cycle and public policies (Aghion andHowitt, 1997; Heathcote et al., 2010) andmore broadly, on financial market imperfections as discussed in Bertola (1999) and Stiglitz…”

“Following Barro (2000), a proxy for globalization is included and Eq.”

“Barro (2000) for example, found a positive relationship between growth and inequality for rich societies, but a negative relationship for poor societies.”

“As a proxy variable for the dispersion of educational attainment, EDGini is calculated by the author from Barro and Lee (2010) data of educational attainment.”

“In the same vein, income inequality has a negative effect on economic growth via the fertility transmission pathway [Barro, 2000; Knowles, 2005; Charles-Coll, 2013; Cingano, 2014; Grundler and Scheuermeyer, 2018].”

“Barro’s [35] findings on the Kuznets curve also sustain the fact that higher inequalities affect growth in poor countries but encourage it in richer countries.”

“Barro and McCleary (2003), Noland (2005) and Sala-i-Martin et al. (2004), finally, investigate the relationship between different religions and economic performance.”

“The results are robust not only in terms of statistical inferences, while it has adopting a new ways to looking Inverted U-shaped Kuznets curve, which previously been ignored in majority of the empirical studies, as Barro (2000) argued that inverted U-shaped Kuznets curve does not provide a true variations in inequali…”

“(1993), Hsing and Smyth (1994), Jacobsen and Giles (1995), Li et al. (1998), Campano and Salvatore (1993) Deininger and Squire (1998), Barro (2000), Dollar and Kraay (2002), Bahmani-Oskooee et al. (2008), and Bahmani-Oskooee and Gelan (2008, 2012).”

“Moreover, some studies even show that income inequality has a nonlinear impact on the process of economic growth (Barro 2000; Huang, Lin, and Yeh 2009), which implies that the impact of income inequality on economic development relies on the stages of development.”

“For example, Barro (2000) and Barro (2008) relate a nation’s economic growth to its Gini coefficient; Alesina and Angeletos (2005) study whether Gini and social belief affect tax and welfare policies; and Jin et al. (2011) argue that high inequality measured by Gini induces less consumption.”

“Income equality is associated with social cohesion (Barro, 2000; Wilkinson and Marmot, 2003; European Commission, 2005) and has been found by several studies to be related to a country’s social capital (e.”

“A partir da abordagem que sugere que a desigualdade afeta positivamente o crescimento para níveis mais baixos do PIB per capita, e negativamente quando esse assume valor mais elevado (Barro, 2000, 2008), verificou-se ainda a existência do efeito não linear da desigualdade no crescimento.”

“…economic growth, our empirical findings are consistent with the results reported in several studies that a positive relationship between these two variables is particularly common for developed, richer countries (e.g. Aghion, Caroli, & García-Peñalosa, 1999; Barro, 2000; Persson & Tabellini, 1994).”

“2 In contrast, Barro (2000) uses a three-stage least squares (3SLS) estimator which treats the country-specific error term as a random variable.”

“secondary level are associated with decreased income inequality (Alderson & Nielsen, 2002; Barro, 2000; Bourguignon & Morrisson, 1990). Health has been considered in literature as a capital productive asset and an engine of economic growth (Barro, 1996). The Solow model of growth is extended by Mankiw et al. (1992) wh…”

“While some authors do find a positive relationship (Perotti 1996), others find a negative relationship (Li and Zou 2002), or no significant effects (Barro 2000, Basu 2013b).”

“Barro (2000) and Spilimbergo et al. (1999) also find openness worsens income inequality up to a certain point and then the effect diminishes.”

“Barro (2000) uses a broad panel of countries and finds that inequality is negatively related to growth for poor countries but not for rich countries.”

“…variables such as education tends to eliminate the statistical significance of the income variables (Bourguignon and Morrison, 1990), but several studies go on supporting empirically the hypothesis, as is the case of Dawson (1997), Li et al., (1998), Barro (2000), Thornton (2001) and Huang (2004).”

“However, it may not be a serious shortcoming, as Barro (2000) found that mixing the inequality measures across the different classifications does not appear to affect parameter estimates.”

“Barro (2000) and Banerjee and Duflo (2003) also present evidence against such a clear-cut negative relationship.”