11 Pages Posted: 7 Apr 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.
JEL Classification: C14, C21, O11, O15
Suggested Citation: Suggested Citation
Kim, Dong-Hyeon and Huang, Ho‐Chuan and Lin, Shu-Chin, Kuznets Hypothesis in a Panel of States. Contemporary Economic Policy, Vol. 29, No. 2, pp. 250-260, 2011. Available at SSRN: https://ssrn.com/abstract=1804766 or http://dx.doi.org/10.1111/j.1465-7287.2010.00218.x
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