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Income Inequality, Poverty and Growth

Year 2022, Volume: 11 Issue: 1, 680 - 702, 31.03.2022
https://doi.org/10.15869/itobiad.880351

Abstract

Today, one of the most important causes of global income inequality and poverty is the unequal sharing of the increase in economic growth between countries and regions. The increase in income inequality creates an important obstacle to economic development as it reduces the share of the poor in economic growth. Therefore, reducing poverty and income inequality is a fundamental policy goal in the development process. Because in the process of poverty alleviation, providing a fair income distribution as well as growth is important in terms of obtaining more effective results. For this reason, the aim of the study is to analyze the direction of global income inequality and its change by using the nonparametric conditional density estimation method. The analysis provides evidence to support that global income inequality did not decrease between 1995 and 2017. This result indicates that the gap is widening between countries with more even distribution and countries with an unfair distribution of income. Besides, the other aim of this study is to investigate the relationship between income inequality, poverty and economic growth. In this context, countries are classified according to income groups and analyzed with cross-section data estimation method. The general findings of the study vary in income groups in accordance with the theoretical literature. According to the results for all income groups, economic growth decreases poverty and income inequality increases poverty. On the other hand, results show that while increasing income inequality in the middle-income group increases growth, in the high-income group the increase in growth decreases inequality.

References

  • Acemoglu, D., & Robinson, J. A. (2001). A Theory of Political Transitions. American Economic Review, 91(4), 938-963.
  • Acemoglu, D., & Robinson, J. A. (2012). Why Nations Fail: The Origins Of Power, Prosperity, and Poverty. Currency.
  • Akinyemi, A., Magareth, L., & Oluwafemi, E. (2019). Poverty and Inequality in Nigeria: Implications for Inclusive Growth. Nile Journal Of Business And Economics, 4(9), 30-51.
  • Alesina, A., & Rodrik, D. (1994). Distributive Politics and Economic Growth. The Quarterly Journal of Economics, 109(2), 465-490.
  • Alesina, A.,& Perotti, R. (1996). Income Distribution, Political Instability, and Investment. European Economic Review, 40(6), 1203-1228.
  • Atkinson, A. B. (2015). Inequality: What Can Be Done?. Harvard University Press.
  • Atkinson, A. B.,& Bourguignon, F. (Eds.). (2014). Handbook of Income Distribution (Vol. 2). Elsevier.
  • Balcilar, M., Gupta, R., Ma, W., & Makena, P. (2019). Income Inequality and Economic Growth: A Re-Examination of Theory and Evidence. Working Paper. University of Pretoria
  • Banerjee, A. V.,& Newman, A. F. (1993). Occupational Choice and the Process of Development. Journal of Political Economy, 101(2), 274-298
  • Baradaran, M (2015).How The Other Half Banks: Exclusion, Exploitation and The Threat to Democracy, Cambridge MA.: Harvard University Press.
  • Barro, R. (2000). Inequality and Growth in a Panel of Countries. Journal of Economic Growth 5,5-32.
  • Bourguignon, F. (2003). The Poverty-Growth-Inequality Triangle, Contribution Presented in Indian Council for Research on International Economic Relations, New Delhi, India.
  • Bourguignon, F. (2004). The Poverty-Growth-Inequality Triangle. The World Bank Policy Working paper. No. 125. World Bank: Washington D.C.
  • Breunig, R.,& Majeed, O. (2020). Inequality, Poverty and Economic Growth. International Economics, 161, 83-99.
  • Chemli, L.,& Smida, M. (2013). Interaction Between Poverty, Growth, and Inequality During the Crisis: A Panel Data Study. International Journal of Economics and Finance, 5(5), 120-130.
  • Cingano, F. (2014). Trends in Income Inequality and its Impact on Economic Growth.
  • Deaton, A. (2013). The Great Escape: Health, Wealth, and the Origins of Inequality. Princeton University Press
  • Deininger, K.,& Squire, L. (1998). New Ways of Looking at Old Issues: Inequality and Growth. Journal of Development Economics, 57(2), 259-287.
  • Dhongde, S.,& Miao, X. (2013). Cross-Country Convergence in Income Inequality. WP 2013-290. ECINE. Society for the Study of Economic Inequality.
  • Dhrifi, A. (2013). Financial Development and Poverty: What Role for Growth And Inequality. International Journal of Academic Research in Accounting, Finance and Management Sciences, 3(4), 119-129.
  • Dollar, D.,& Kraay, A. (2000). Growth is Good For The Poor.“World Bank. Development Research Group, Washington, DC Processed. 3). Working Paper.
  • Galor, O. (2011). Inequality, Human Capital Forma¬tion and The Process of Development. National Bureau of Economic Research Working Paper, No: 17058.
  • Galor, O.,& Moav, O. (2004). From Physical to Human Capital Accumulation: Inequality and The Process of Development. The Review of Economic Studies, 71(4), 1001-1026.
  • Galor, O.,& Zeira, J. (1993). Income Distribution and Macroeconomics. The Review of Economic Studies, 60(1), 35-52.
  • Gries, T.,& Redlin, M. (2010). Short-Run and Long-Run Dynamics of Growth, Inequality and Poverty in the Developing World. Univ., Center for International Economics.
  • Guiga, H.,& Rejeb, J. B. (2012). Poverty, Growth and Inequality in Developing Countries. International Journal of Economics and Financial Issues, 2(4), 470-479.
  • Iradian, M. G. (2005). Inequality, Poverty, and Growth: Cross-Country Evidence (EPub) (No. 5-28). International Monetary Fund.
  • Kakwani, N. C. (1980). Income Inequality and Poverty. New York: World Bank.
  • Kakwani, N., Prakash, B., & Son, H. (2000). Growth, Inequality, and Poverty: An Introduction.
  • Khan, M. A., Khan, M. Z., Zaman, K., Hassan, U., & Umar, S. (2014). Global Estimates of Growth–İnequality–Poverty (GIP) Triangle: Evidence From World Bank’s Classification Countries. Quality & Quantity, 48(5), 2631-2646.
  • Kraay, A. (2015). Weak Instruments in Growth Regressions. Implications for Recent Cross- Country Evidence on Inequality and Growth. Policy Research Working Paper 7494, WB.
  • Kuznets, S. (1955). Economic Growth and Income Inequality. The American Economic Review, 45(1), 1-28.
  • Li, H.,& Zou, H. F. (2002). Inflation, Growth, and Income Distribution: A Cross-Country Study. Annals of Economics and Finance, 3(1), 85-101.
  • Li, Q.,& Racine, J. S. (2007). Nonparametric Econometrics: Theory and Practice. Princeton University Press.
  • Lopez, H. (2006), Growth and Inequality: Are the 1990s Different? Economics Letters, 93(1), 18-25.
  • Lopez, J. H. (2004). Pro-Poor Growth: A Review of What We Know (and of What We Don’t). The world bank.
  • Marrero, G. A.,& Servén, L. (2018). Growth, Inequality, and Poverty: A Robust Relationship?. The World Bank.
  • Milanovic, B. (2013). Global Income Inequality in Numbers: in History and Now, Global Policy 4(2), 198–208.
  • Naschold, F. (2002). Why Inequality Matters for Poverty. Inequality Briefing Paper, 2.
  • Niyimbanira, F. (2017). Analysis of the impact of Economic Growth on Income Inequality and Poverty in South Africa: The Case of Mpumalanga Province. International Journal of Economics and Financial Issues, 7(4), 254-261.
  • Ogbeide-Osaretin, E. N. (2018). An Empırıcal Analysıs of Poverty-Growth-Inequalıty Linkage in Nigerıa. International Journal of Social Science and Economic Research ISSN: 2455-8834 Volume:03, Issue:05
  • Partridge, M. D. (1997). Is Inequality Harmful for Growth? Comment. The American Economic Revi¬ew, 87(5), 1019-1032.
  • Perotti, R. (1996). Growth, Income distribution, and Democracy: What The Data Say. Journal of Econo¬mic growth, 1(2), 149-187.
  • Persson, T., & Tabellini, G. (1994). ls lnequality Harmful for Growth. American Economic Review, 84(3), 600-621.
  • Piketty, T. (2000). Theories of Persistent Inequality and Intergenerational Mobility. Chapter 8 in A.Atkinson and F.Bourguignon, Handbook of Income Distribution.
  • Psacharopoulos, G., Morley, S., Fiszbein, A., Lee, H., & Wood, W. C. (1995). Poverty and Income Inequality in Latin America During the 1980s. Review of Income and Wealth, 41(3), 245-264.
  • Quah, D. T. (1997). Empirics for Growth and Distribution: Stratification, Polarization, and Convergence Clubs. Journal of Economic Growth, 2(1), 27-59.
  • Racine, J. S. (2008). Nonparametric Econometrics: A Primer. Foundations and Trends® in Econometrics, 3(1), 1-88.
  • Ravallion, M. (2015). The Economics Of Poverty: History, Measurement, And Policy. Oxford University Press.
  • Ravallion, M., & Chen, S. (1999). What Can New Survey Data Tell Us About Recent Changes in Distribution and Poverty?. The World Bank.
  • Lucas, R. E. (2002). The Industrial Revolution: Past and Future. Lectures on Economic Growth, 109-188.
  • Soava, G., Mehedintu, A., & Sterpu, M. (2020). Relations Between Income Inequality, Economic Growth and Poverty Threshold: New Evidences From EU Countries Panels. Technological and Economic Development of Economy, 26(2), 290-310.
  • Solt, F. (2019). Measuring Income Inequality Across Countries and Over Time: The Standardized World Income Inequality Database.
  • Stiglitz, J. E. (2012). The Price of Inequality: How Today's Divided Society Endangers Our Future. WW Norton & Company.
  • Stiglitz, J. E. (2016). Inequality and Economic Growth. In Rethinking Capitalism(pp. 134 155).
  • Studenmund, A.H. (1992).Using Econometrics: A Practical Guide, (Second Edition), New York: Harper Collins Publisher.
  • Tridico, P. (2010). Growth, Inequality and Poverty in Emerging and Transition Economies. Transition Studies Review, 16(4), 979-1001.
  • Wooldridge, J. M. (2001). Econometric Analysis of Cross Section and Panal Data, Cambridge, London: The MIT Press.
  • Zaman, K., Al-Ghazali, B. M., Khan, A., Rosman, A. S. B., Sriyanto, S., Hishan, S. S., & Bakar, Z. A. (2020). Pooled Mean Group Estimation for Growth, Inequality, and Poverty Triangle: Evidence From 124 Countries. Journal of Poverty, 24(3), 222-240.

Gelir Eşitsizliği, Yoksulluk ve Büyüme

Year 2022, Volume: 11 Issue: 1, 680 - 702, 31.03.2022
https://doi.org/10.15869/itobiad.880351

Abstract

Günümüzde küresel eşitsizliğin ve yoksulluğun en önemli nedenlerinden biri ekonomik büyümedeki artışın ülkeler ve bölgeler arasında eşit olmayan bir şekilde paylaşılmasıdır. Gelir eşitsizliğindeki artış yoksulların payını azaltması nedeniyle ekonomik kalkınmanın önünde bir engel oluşturmaktadır. Dolayısıyla, yoksulluğun ve gelir eşitsizliğinin azaltılması kalkınma sürecinde temel bir politika hedefi olmaktadır. Çünkü yoksulluğun azaltılması için büyümenin yanı sıra adil bir gelir dağılımının sağlanması daha etkili sonuçların elde edilmesi açısından önem arz etmektedir. Bu nedenle çalışmada küresel gelir eşitsizliği boyutu ve ne yönde değişim gösterdiği parametrik olmayan koşullu yoğunluk tahmin yöntemi kullanılarak analiz edilmektedir. Analizde 1995-2017 yılları arasında küresel gelir eşitsizliğinin azalış göstermediğini destekleyen kanıtlar elde edilmektedir. Bu sonuç gelirin eşit dağıldığı ülkeler ve gelirin daha adaletsiz dağıldığı ülkeler arasında farkın arttığına işaret etmektedir. Bununla birlikte, çalışmanın diğer bir amacı ise, gelir eşitsizliği, yoksulluk ve ekonomik büyüme arasındaki ilişkinin araştırılmasıdır. Bu kapsamda ülkeler gelir gruplarına göre sınıflandırılarak yatay kesit veri tahmin yöntemi ile incelenmektedir. Çalışmanın genel bulguları teorik literatürle uyumlu olarak gelir gruplarına göre çeşitlilik göstermektedir. Elde edilen sonuçlara göre, bütün gelir gruplarında gelir eşitsizliğindeki artış yoksulluğu arttırmakta, ekonomik büyüme ise yoksulluğu azaltmaktadır. Bu bağlamda ülkelerin yoksulluk sorunlarıyla etkili olarak mücadele edebilmesi, artan gelir eşitsizliği olgusunun dikkate alınmasını gerektirmektedir. Çünkü ekonomik büyümenin yoksulluk üzerindeki olumlu etkisi, genel olarak ülkelerde gelir eşitsizliği seviyesine bağlı olmaktadır. Bununla birlikte, orta gelir grubunda gelir eşitsizliğinin artması büyümeyi arttırırken, yüksek gelir grubunda büyümenin artmasının eşitsizliği azalttığına yönelik sonuçlar elde edilmektedir.

References

  • Acemoglu, D., & Robinson, J. A. (2001). A Theory of Political Transitions. American Economic Review, 91(4), 938-963.
  • Acemoglu, D., & Robinson, J. A. (2012). Why Nations Fail: The Origins Of Power, Prosperity, and Poverty. Currency.
  • Akinyemi, A., Magareth, L., & Oluwafemi, E. (2019). Poverty and Inequality in Nigeria: Implications for Inclusive Growth. Nile Journal Of Business And Economics, 4(9), 30-51.
  • Alesina, A., & Rodrik, D. (1994). Distributive Politics and Economic Growth. The Quarterly Journal of Economics, 109(2), 465-490.
  • Alesina, A.,& Perotti, R. (1996). Income Distribution, Political Instability, and Investment. European Economic Review, 40(6), 1203-1228.
  • Atkinson, A. B. (2015). Inequality: What Can Be Done?. Harvard University Press.
  • Atkinson, A. B.,& Bourguignon, F. (Eds.). (2014). Handbook of Income Distribution (Vol. 2). Elsevier.
  • Balcilar, M., Gupta, R., Ma, W., & Makena, P. (2019). Income Inequality and Economic Growth: A Re-Examination of Theory and Evidence. Working Paper. University of Pretoria
  • Banerjee, A. V.,& Newman, A. F. (1993). Occupational Choice and the Process of Development. Journal of Political Economy, 101(2), 274-298
  • Baradaran, M (2015).How The Other Half Banks: Exclusion, Exploitation and The Threat to Democracy, Cambridge MA.: Harvard University Press.
  • Barro, R. (2000). Inequality and Growth in a Panel of Countries. Journal of Economic Growth 5,5-32.
  • Bourguignon, F. (2003). The Poverty-Growth-Inequality Triangle, Contribution Presented in Indian Council for Research on International Economic Relations, New Delhi, India.
  • Bourguignon, F. (2004). The Poverty-Growth-Inequality Triangle. The World Bank Policy Working paper. No. 125. World Bank: Washington D.C.
  • Breunig, R.,& Majeed, O. (2020). Inequality, Poverty and Economic Growth. International Economics, 161, 83-99.
  • Chemli, L.,& Smida, M. (2013). Interaction Between Poverty, Growth, and Inequality During the Crisis: A Panel Data Study. International Journal of Economics and Finance, 5(5), 120-130.
  • Cingano, F. (2014). Trends in Income Inequality and its Impact on Economic Growth.
  • Deaton, A. (2013). The Great Escape: Health, Wealth, and the Origins of Inequality. Princeton University Press
  • Deininger, K.,& Squire, L. (1998). New Ways of Looking at Old Issues: Inequality and Growth. Journal of Development Economics, 57(2), 259-287.
  • Dhongde, S.,& Miao, X. (2013). Cross-Country Convergence in Income Inequality. WP 2013-290. ECINE. Society for the Study of Economic Inequality.
  • Dhrifi, A. (2013). Financial Development and Poverty: What Role for Growth And Inequality. International Journal of Academic Research in Accounting, Finance and Management Sciences, 3(4), 119-129.
  • Dollar, D.,& Kraay, A. (2000). Growth is Good For The Poor.“World Bank. Development Research Group, Washington, DC Processed. 3). Working Paper.
  • Galor, O. (2011). Inequality, Human Capital Forma¬tion and The Process of Development. National Bureau of Economic Research Working Paper, No: 17058.
  • Galor, O.,& Moav, O. (2004). From Physical to Human Capital Accumulation: Inequality and The Process of Development. The Review of Economic Studies, 71(4), 1001-1026.
  • Galor, O.,& Zeira, J. (1993). Income Distribution and Macroeconomics. The Review of Economic Studies, 60(1), 35-52.
  • Gries, T.,& Redlin, M. (2010). Short-Run and Long-Run Dynamics of Growth, Inequality and Poverty in the Developing World. Univ., Center for International Economics.
  • Guiga, H.,& Rejeb, J. B. (2012). Poverty, Growth and Inequality in Developing Countries. International Journal of Economics and Financial Issues, 2(4), 470-479.
  • Iradian, M. G. (2005). Inequality, Poverty, and Growth: Cross-Country Evidence (EPub) (No. 5-28). International Monetary Fund.
  • Kakwani, N. C. (1980). Income Inequality and Poverty. New York: World Bank.
  • Kakwani, N., Prakash, B., & Son, H. (2000). Growth, Inequality, and Poverty: An Introduction.
  • Khan, M. A., Khan, M. Z., Zaman, K., Hassan, U., & Umar, S. (2014). Global Estimates of Growth–İnequality–Poverty (GIP) Triangle: Evidence From World Bank’s Classification Countries. Quality & Quantity, 48(5), 2631-2646.
  • Kraay, A. (2015). Weak Instruments in Growth Regressions. Implications for Recent Cross- Country Evidence on Inequality and Growth. Policy Research Working Paper 7494, WB.
  • Kuznets, S. (1955). Economic Growth and Income Inequality. The American Economic Review, 45(1), 1-28.
  • Li, H.,& Zou, H. F. (2002). Inflation, Growth, and Income Distribution: A Cross-Country Study. Annals of Economics and Finance, 3(1), 85-101.
  • Li, Q.,& Racine, J. S. (2007). Nonparametric Econometrics: Theory and Practice. Princeton University Press.
  • Lopez, H. (2006), Growth and Inequality: Are the 1990s Different? Economics Letters, 93(1), 18-25.
  • Lopez, J. H. (2004). Pro-Poor Growth: A Review of What We Know (and of What We Don’t). The world bank.
  • Marrero, G. A.,& Servén, L. (2018). Growth, Inequality, and Poverty: A Robust Relationship?. The World Bank.
  • Milanovic, B. (2013). Global Income Inequality in Numbers: in History and Now, Global Policy 4(2), 198–208.
  • Naschold, F. (2002). Why Inequality Matters for Poverty. Inequality Briefing Paper, 2.
  • Niyimbanira, F. (2017). Analysis of the impact of Economic Growth on Income Inequality and Poverty in South Africa: The Case of Mpumalanga Province. International Journal of Economics and Financial Issues, 7(4), 254-261.
  • Ogbeide-Osaretin, E. N. (2018). An Empırıcal Analysıs of Poverty-Growth-Inequalıty Linkage in Nigerıa. International Journal of Social Science and Economic Research ISSN: 2455-8834 Volume:03, Issue:05
  • Partridge, M. D. (1997). Is Inequality Harmful for Growth? Comment. The American Economic Revi¬ew, 87(5), 1019-1032.
  • Perotti, R. (1996). Growth, Income distribution, and Democracy: What The Data Say. Journal of Econo¬mic growth, 1(2), 149-187.
  • Persson, T., & Tabellini, G. (1994). ls lnequality Harmful for Growth. American Economic Review, 84(3), 600-621.
  • Piketty, T. (2000). Theories of Persistent Inequality and Intergenerational Mobility. Chapter 8 in A.Atkinson and F.Bourguignon, Handbook of Income Distribution.
  • Psacharopoulos, G., Morley, S., Fiszbein, A., Lee, H., & Wood, W. C. (1995). Poverty and Income Inequality in Latin America During the 1980s. Review of Income and Wealth, 41(3), 245-264.
  • Quah, D. T. (1997). Empirics for Growth and Distribution: Stratification, Polarization, and Convergence Clubs. Journal of Economic Growth, 2(1), 27-59.
  • Racine, J. S. (2008). Nonparametric Econometrics: A Primer. Foundations and Trends® in Econometrics, 3(1), 1-88.
  • Ravallion, M. (2015). The Economics Of Poverty: History, Measurement, And Policy. Oxford University Press.
  • Ravallion, M., & Chen, S. (1999). What Can New Survey Data Tell Us About Recent Changes in Distribution and Poverty?. The World Bank.
  • Lucas, R. E. (2002). The Industrial Revolution: Past and Future. Lectures on Economic Growth, 109-188.
  • Soava, G., Mehedintu, A., & Sterpu, M. (2020). Relations Between Income Inequality, Economic Growth and Poverty Threshold: New Evidences From EU Countries Panels. Technological and Economic Development of Economy, 26(2), 290-310.
  • Solt, F. (2019). Measuring Income Inequality Across Countries and Over Time: The Standardized World Income Inequality Database.
  • Stiglitz, J. E. (2012). The Price of Inequality: How Today's Divided Society Endangers Our Future. WW Norton & Company.
  • Stiglitz, J. E. (2016). Inequality and Economic Growth. In Rethinking Capitalism(pp. 134 155).
  • Studenmund, A.H. (1992).Using Econometrics: A Practical Guide, (Second Edition), New York: Harper Collins Publisher.
  • Tridico, P. (2010). Growth, Inequality and Poverty in Emerging and Transition Economies. Transition Studies Review, 16(4), 979-1001.
  • Wooldridge, J. M. (2001). Econometric Analysis of Cross Section and Panal Data, Cambridge, London: The MIT Press.
  • Zaman, K., Al-Ghazali, B. M., Khan, A., Rosman, A. S. B., Sriyanto, S., Hishan, S. S., & Bakar, Z. A. (2020). Pooled Mean Group Estimation for Growth, Inequality, and Poverty Triangle: Evidence From 124 Countries. Journal of Poverty, 24(3), 222-240.
There are 59 citations in total.

Details

Primary Language English
Subjects Economics
Journal Section Articles
Authors

Duygu Serin Oktay 0000-0001-7912-4054

Neşe Algan 0000-0001-7989-1114

Early Pub Date March 7, 2022
Publication Date March 31, 2022
Published in Issue Year 2022 Volume: 11 Issue: 1

Cite

APA Serin Oktay, D., & Algan, N. (2022). Income Inequality, Poverty and Growth. İnsan Ve Toplum Bilimleri Araştırmaları Dergisi, 11(1), 680-702. https://doi.org/10.15869/itobiad.880351

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