Inequality, Growth, and Investment
54 Pages Posted: 31 Oct 1999 Last revised: 12 Oct 2010
Date Written: March 1999
Evidence from a broad panel of countries shows little overall relation between income inequality and rates of growth and investment. However, for growth, higher inequality tends to retard growth in poor countries and encourage growth in richer places. The Kuznets curve-whereby inequality first increases and later decreases during the process of economic development-emerges as a clear empirical regularity. However does not explain the bulk of variations in inequality across countries or over time.
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