Kuznets Hypothesis in a Panel of States
Department of Food and Resource Economics, Korea University
Tamkang University - Banking & Finance
Tamkang University - Department of Economics
Contemporary Economic Policy, Vol. 29, No. 2, pp. 250-260, 2011
This paper uses a new comprehensive cross-state panel for the United States over the 1945-2004 period to reassess the relationship between income inequality and economic development. By employing the pooled mean group estimator of Pesaran, Shin, and Smith (1999), it detects a long-run cointegrating association between inequality and development (as well as its squared term). Moreover, their relationship is better characterized by a U shape rather than the inverted-U profile asserted by Kuznets (1955). The evidence is robust to a variety of sensitivity tests.
Number of Pages in PDF File: 11
JEL Classification: C14, C21, O11, O15
Date posted: April 7, 2011
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