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

Year 2016, Volume: 11 Issue: 3, 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

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