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Income Inequality is not Harmful for Growth: Theory and Evidence
Open accessAbstract
The paper shows that income inequality may theoretically lead to higher economic growth if public consumption enters the utility function. Empirically, baseline estimations and a sensitivity analysis show that income inequality is positively, and most of the time significantly, associated with economic growth. These findings stand in sharp contrast to the negative association between inequality and growth propounded by Alesina and Rodrik and by Persson and Tabellini.
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Citations
Cited by
Inequality and Growth in a Panel of Countries
Barro, R. J. (2000) · Journal of Economic Growth · doi:10.1023/a:1009850119329 · Cited by 2,676
Inequality and Growth: What Can the Data Say?
Banerjee, A., & Duflo, E. (2000) · National Bureau of Economic Research · doi:10.3386/w7793 · Cited by 720
Development as institutional change: The pitfalls of monocropping and the potentials of deliberation
Evans, P. (2004) · Studies in Comparative International Development · doi:10.1007/bf02686327 · Cited by 639
Inequality and Growth: What Can the Data Say?
Banerjee, A. V., & Duflo, E. (2003) · Journal of Economic Growth · doi:10.1023/a:1026205114860 · Cited by 592
Growth, Inequality, and Poverty: Looking beyond Averages
Ravallion, M. (2001) · World Bank, Washington, DC eBooks · doi:10.1596/1813-9450-2558 · Cited by 353
Metadata
- Authors
- Li, H., & Zou, H.
- Venue
- Review of Development Economics
- Publisher
- Wiley
- Published
- 1998-10
- Volume
- 2
- Issue
- 3
- Pages
- 318-334
- ISSN
- 1363-6669 (ISSN-L)
- 1467-9361
- OpenAlex
- W2070885761
- Cited by
- 659
- References
- 0
- FWCI
- 33.03
- Type
- journal article
- Language
- en
- Open access
- green
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- CoChat. (2026). Citation check: Income Inequality is not Harmful for Growth: Theory and Evidence. https://app.cochat.ai/papers/10.1111/1467-9361.00045
- The paper
- Li, H., & Zou, H. (1998). Income Inequality is not Harmful for Growth: Theory and Evidence. Review of Development Economics. https://doi.org/10.1111/1467-9361.00045
Data sources
Bibliographic data: Semantic Scholar, OpenAlex, Crossref.
Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.