Inequality and Growth in a Panel of Countries

“Greater international trading openness would raise inequality in rich countries and lower it in poor countries (Barro 2000).”

“The sign of the relation between inequality and growth of societies as well as the causal link between the two has been at the center of a debate in macroeconomics and development (Barro, 2000; Forbes, 2000; Persson and Tabellini, 1991).”

“In particular in the European Union there has been recently an increasing concern over this subject, due to the fact that the narrowing of regional disparities is surely one of the major aims of the regional policies for both equalitarian reasons and for the inverse relationship between economic inequality and growth…”

“Barro (2000) estimates the impact of inequality on growth by splitting a sample of 100 countries into high- and low-income samples.”

“In the case of crosscountry data, Barro (2000) by contrast finds no general relationship between inequality and growth.”

“Serves capture Kuznets type effects, see also Frazer (2009) and Barro (2000) World Development Indicators (WDI)”

“Frank (2009b) points out that: The greater homogeneity of state-level data helps mitigate the difficulty in adequately capturing structural differences across international panels of earlier studies such as Forbes (2000) and Barro (2000). Corruption levels, labor market flexibility, tax neutrality, tradition of entrep…”

“Three specifications are widely used in the macroeconomic literature on the relationship be-tween income inequality and economic growth (Barro 2000; Mankiw, Romer and Weil 1992; Perotti 1996).”

“17 A’Hearn, Baten and Crayen (2009) found that this index is the only one that fulfils the desired properties of scale independence (a linear response to the degree of heaping), and that it ranks samples with different degrees of heaping reliably.”

“Another widely cited study, Barro 2000 finds, for a samples of 40 to 70 countries and 10-year time periods, that higher inequality leads to lower growth in poor countries and higher growth in rich countries, but there is little overall relationship between income inequality and growth.”

“If for a specific country higher growth rates bring more FDI flows and/or more openness, then our results may be linked to Barro (2000) .”

“Even if there turns out to be no relationship between income inequality and per capita income (Barro, 2000), income inequality remains an important launching pad for the institution of income mobility.”

“There is a substantial empirical literature on this topic today, some of which is supportive of this standard inverted-U relationship (Kuznets, 1955; Barro, 2000; Chiswick, 1971; Lenski, 1984; Szirmai, 1988).”

“Moreover, the lack of available data for wealth and asset inequality for a broad number of countries and periods has forced empirical studies to use income inequality measures instead (e.g. Persson and Tabellini, 1994; Barro, 2000, Banerjee and Du fl o, 2003).”

“Within this framework, a great number of authors have investigated the impact of income inequality on economic growth through different mechanisms that often work in opposite directions (e.g. PEROTTI, 1996; BARRO, 2000).”

“But there are several other WIID-based studies arguing that openness has, if anything, been associated with less inequality in the industrial world (Barro 2000, Higgins and Williamson 1999, Lundberg and Squire 2000, and Spilimbergo, Londono and Szekely 1999).”

“Barro (2000) argued that inequality is preventing growth only in very poor countries, while medium income countries actually grew faster with more inequality according to his regression analysis.”

“381), in turn producing potentially misleading results (Barro, 2000). In addition, the short time intervals considered in this work and in other similar analyses (Rodríguez-Pose & Tselios, 2010) further question the use of FE to account for the omitted variable bias. Forbes (2000) also recalls that in panels with a li…”

“Calderon and Chong (2001) find that greater openness reduces inequality in developing countries; the results of Barro (2000) and Ravallion (2001) suggest that trade raises inequality in low-income countries and reduces inequality in high-income countries; and Herzer and Vollmer (2013) find in a…”

“The data gathered by Deininger and Squire (1998), Higgins and Williamson (1999), Savvidesa and Stengos (2000), and Barro (2000) also failed to definitely confirm Kuznets’ findings.”

“The results of this analysis echo the findings of Beer and Boswell (2001), Zhang and Fan (2004), Barro (1999), Chen (2005), and others that higher rates of schooling and higher literacy mitigate inequality in developing countries.”

“…a more pronounced functional, 12 The empirical literature frequently analysed this relationship by looking at the reduced-form approach between inequality and subsequent growth in the cross-country regression analysis (Barro, 2000; Deininger & Squire, 1996; Forbes, 2000; Perotti, 1996, etc.).”

“Some empirical studies support an insignificant or even a positive impact of inequality on growth (Li and Zou (1998), Barro (2000), Forbes (2000)), whilst others find a negative relationship (Alesina and Rodrik (1994), Persson and Tabellini (1994)).”

“Initial results linking inequality to poor economic growth (Alesina and Rodrik, 1994; Persson and Tabellini, 1994; Clarke, 1995; Alesina and Perotti, 1996) have been called into question by the findings of others (Forbes, 2000; Barro, 2000; Banerjee and Duflo, 2003). In particular, Forbes (2000) discovered a positive…”

“When the Gini coefficient is measured on a scale that runs from 0 to 1, its standard deviation is about 0.1 in the samples used by both Barro (2000) and Forbes (2000).”

“132. Berger (1993) analyzed two effects of the 1981 Act: how much expenditure increased, and how much of the increase was absorbed by an increased prices for R&D input (called an implicit tax).”

“4 Barro (2000) provides a good explanation of how some approaches can predict a negative or a positive effect on growth, depending on the circumstances. As Barro notes, even under the sociopolitical instability approach, lower inequality may not lead to higher growth: if economic resources are required for the poor to…”

“Furthermore, it is consistent with recent empirical findings obtained in slightly different contexts (Milanovic, 2002; Barro, 2000; Lundberg and Squire, 1999; see Table 1), but, contrary to these studies, it relies on a theoretical foundation explaining how trade can lead to an increase in…”

“hiding”. Barro (2000) , in particular, has forcefully argued for this view.”

“This result is an extension of the findings of Barro (2000).”

“Barro (2000) and EY International Congress on Economics I "Europe and Global Economic Rebalancing” October 24-25, 2013, Ankara/Turkey later on in its updated and extended version Barro (2008) confirm that the Kuznets hypothesis is valid for a wide selection of countries.”

“Barro (2000) finds empirical support for the Kuznets hypothesis and shows that more inequality slows growth in poor countries and encourages growth in rich countries.”

“European Economic Review, 40(6), 1203-1228.”

“Krueger & Lindahl, 2001 ; Barro, 1991 1997 2000 ), also in Asia.”

“Inequality has also been proven to have some harmful effects on growth (Barro, 2000; Persson & Tabellini, 1994).”

“These findings are contradictory to those of Shahbaz (2010) for Pakistan, but consistent with Barro (2000).”

“…of the period as a right-hand-side variable (from column 4 onwards), as convergence in median incomes, whereby countries with initially lower incomes tend to grow comparatively quickly and catch up, might complicate the relationship between change in median incomes and in inequality (Barro, 2000).”

“Barro (2000) found that the impact of inequality on growth depended on a country’s development level (measured by log real per capita GDP).”

“1 See e.g. Barro (2000); Dollar and Kraay (2001); Higgins and Williamson (1999); Li et al. (1998).”

“Therefore, the variables were added to Equation (1) in line with previous studies on economic growth (Barro 1991, 2000; Islam, 1995; Mankiw et al. 1992).”

“4 We also use the share of the population living in urban 2Examples of this more recent literature are Deininger and Squire [6], Barro [4], Frazer [9], Higgins and Williamson [10], Li et al.”

“…view is that higher inequality promotes stronger incentives, generates greater savings and investment, and endows the rich with the minimum capital needed to start economic activity, thereby stimulating growth (Aghion, Caroli, and Garcia-Penalosa 1999; Barro 2000; Kaldor 1957; Okun 2015).”

“Based on the hypothesis that long-term poverty reduction is driven mainly by economic growth (Barro, 2000; Kraay, 2006), some of the scholars who have used macro data have explored whether the Internet has a positive growth effect by examining the nexus between Internet investments and aggregate…”

“Studies that are referred to the relation between the Industry 4.0 and the income inequality are that of Acemoglu [11], Barro [12], Krueger [13], Krusell et al.”

“6 Some additional studies that explore the inequality–growth relationship are Perotti (1996), Barro (2000), Forbes (2000), Banerjee and Duflo (2003), and Voitchovsky (2005).”