The Relationship Between Economic Growth and Income Inequality: The Validity of Kuznets inverted-U Hypothesis

Year 2016, , 115 - 130, 18.12.2016

Seher Gülşah Topuz , Özcan Dağdemir

https://doi.org/10.17153/oguiibf.272308

Cited By: 15

Abstract

This
study aims to determine effects of economic growth on income inequality by
classifiying countries in terms of their level of development. The validity of
Kuznets’s inverted-U shaped hypothesis is tested for four different panels that
is divided as low and low-middle income countries, upper-middle income
countries, high income countries and all countries. This paper examines that
the relationship between economic growth and income inequality by using data
for the period of 1995-2011 and 94 countries. The evidences support Kuznets’s
hypothesis. Income inequality decreases with economic growth in high income
countries, while it increases in low and low-middle income and upper-middle
income countries. The results indicate that economic growth should be supported
by the policies reducing income inequality.

Keywords

Economic Growth, Income Inequality, Kuznets Curve

Ekonomik Büyüme ve Gelir Eşitsizliği İlişkisi: Kuznets Ters-U Hipotezi’nin Geçerliliği

Abstract

Bu çalışma ülkeleri gelişme seviyelerine göre sınıflandırarak ekonomik büyümenin gelir eşitsizliği üzerindeki etkilerini tespit etmeyi amaçlamaktadır.  Düşük ve düşük-orta gelirli ülkeler, üst-orta gelirli ülkeler, yüksek gelirli ülkeler ve tüm ülkeler olmak üzere dört farklı panelde Kuznets’in ters-U hipotezinin geçerliliği sınanmıştır. Çalışmada ekonomik büyüme ve gelir eşitsizliği ilişkisi 1995-2011 yılları arası verileri kullanılarak 94 ülke için incelenmektedir. Çalışmanın bulguları Kuznets hipotezini desteklemektedir. Düşük ve düşük-orta gelirli ülkeler ile üst-orta gelirli ülkelerde ekonomik büyüme ile gelir eşitsizliği artarken; yüksek gelirli ülkelerde ekonomik büyüme ile gelir eşitsizliği azalmaktadır. Çalışmanın sonuçları, ekonomik büyümenin gelir eşitsizliğini azaltmaya yönelik politikalarla desteklenmesi gerektiğini göstermektedir.

Keywords

Ekonomik Büyüme, Gelir Eşitsizliği, Kuznets Eğrisi

References

• Ahluwalia, M.S. (1976), “Inequality, poverty and development”, Journal of Development Economics, Vol. 3, 307-42.
• Arellano, M., ve Bover, O. (1995), “Another Look At The İnstrumental Variables Estimation Of Errorcomponents Models”, Journal of Econometrics, C. 68, 29–51.
• Arrelano, M. ve Bond, S. (1991), "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations.", Review of Economic Studies, C. 58, No: 2.
• Alesina, A., ve Rodrik D., (1994), “Distributive Politics and Economic Growth,” Quarterly Journal of Economics, 465–490.
• Banerjee, A. V., ve Duflo, E. (2003), “Inequality and growth: What can the data say?”, Journal of economic growth, 8(3), 267-299.
• Barro, R. (2000), ‘‘Inequality and Growth in a Panel of Countries’’, Journal of Economic Growth C. 5, No: 1, 5–32.
• Barro, R. J. (2008), “Inequality and growth revisited”, ADB Working paper series on regional economic integration, (No. 11).
• Bengoa-Calvo, M., ve Sánchez-Robles, B. (2004), “Economic growth and inequality in Latin-American Countries: Some empirical findings”, Available at SSRN 525882.
• Blundell, R., ve Bond, S. (1998), “Initial Conditions And Moment Restrictions İn Dynamic Panel Data Models”, Journal of Econometrics, C. 87, 115–143.
• Brussolo, M. E. (2011), “The kuznets hypothesis revisited: Exploring mexican inequality at the sub-national level” (Order No. 3455596), Available from ProQuest Dissertations & Theses Global. (868713427). http://search.proquest.com/docview/868713427?accountid=16716
• Castelló, A., ve Doménech, R. (2002), “Human capital inequality and economic growth: some new evidence”, The economic journal, 112(478), C187-C200.
• Chen, B-L. (2003), “An inverted-U relationship between inequality and longrun growth”, Economic Letters, 78(2), 205-212.
• Dawson, P. (1997), “On testing Kuznets’ economic growth hypothesis”, Applied Economic Letter, Vol. 4 No. 7, 409-10.
• Dağdemir, Ö. (2008), “Küreselleşmenin gelişmekte olan ülkelerde gelir dağılımı üzerindeki etkileri”, İktisat Isletme ve Finans, 23(265), 114-129.
• Deininger, K. ve Squire, L. (1996), “A new data set measuring income inequality”, World Bank Economic Review, Vol. 10, 565-91.
• Forbes, Kristin J. (2000), "A reassessment of the relationship between inequality and growth." American economic review, 869-887.
• Huang, H. C. R. (2004), “A flexible nonlinear inference to the Kuznets hypothesis”, Economics Letters, 84(2), 289-296.
• Khasru, S. M., ve Jalil, M. M. (2004), “Revisiting Kuznets hypothesis: An analysis with time series and panel data”, The Bangladesh Development Studies, 89-112.
• Kuznets, S. (1955), “Economic Growth and Income Inequality”. The American Economic Review C. 45(1).
• Kuznets, S. (1963), “Quantitative aspects of economic growth of nations: III, distribution of income by size”, Economic Development and Cultural Change, Vol. 11, 1-80.
• Lee, W., ve Roemer, J. E. (1998), Income distribution, redistributive politics, and economic growth. Journal of Economic Growth, 3(3), 217-240.
• Li, H., ve Zou H. (1998), "Income inequality is not harmful for growth: theory and evidence." Review of development economics 2.3, 318-334.
• Malinen T. (2012), Estimating the long-run relationship between income inequality and economic development. Empirical Economics, forthcoming.
• Ongan, T. H. (2004), “Gelir Eşitsizliği, Doğrudan Yabancı Sermaye Yatırımları ve Ters U Eğrisi”, İktisat Fakültesi Mecmuası, 54(1), 153.
• Partridge, Mark D. (1997), "Is inequality harmful for growth? Comment." The American Economic Review 87.5, 1019-1032.
• Paukert, F. (1973), “Income Distribution at Different Levels of Development: A Survey of Evidence”, International Labour Review 108, 97-125.
• Persson, T. ve Tabellini, G., (1994), “Is inequality harmful for growth: Theory and evidence”, American Economic Review, 84(3), 600–621.
• Piketty, T. (2014), Yirmi Birinci Yüzyılda Kapital (Çeviren: Hande Koçak): Türkiye İş Bankası Kültür Yayınları, İnceleme/Araştırma, 1.
• Ram, R. (1989), “Level of Development and Income Inequality: An Extension of Kuznets‐Hypothesis to the World Economy”, Kyklos, 42(1), 73-88.
• Ram, R. (1997), “Level of economic development and income inequality: evidence from the postwar developed world”, Southern Economic Journal, Vol. 64, 576-83.
• Shahbaz, M. (2010), “Income inequality-economic growth and non-linearity: a case of Pakistan”, International Journal of Social Economics, 37(8), 613-636.
• Shin, I., (2012), Income inequality and economic growth. Economic Modelling, 29(5), 2049-2057.
• Thornton, J. (2001), “The Kuznets inverted-U hypothesis: panel data evidence from 96 countries”, Applied Economics Letters, 8(1), 15-16.
• Tokatlıoğlu, I., ve Atan, M. (2007), “Türkiye'de Bölgeler Arası Gelişmişlik Düzeyi Ve Gelir Dağılımı Eşitsizliği: Kuznets Eğrisi Geçerli Mi?”, Ekonomik Yaklaşım, 18(65), 25-58.