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

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

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