INCOME INEQUALITY AND ECONOMIC GROWTH: AN ECONOMETRIC ANALYSIS OF OECD COUNTRIES (2005-2018)

Abstract

The aim of this paper is to explore how income inequality affects economic growth and to determine the other effects of income inequality. We used secondary data provided from the reports of the central banks of the OECD member countries and then subject them to trend analysis and 4 analysis methods, specifically; fixed effect regression method, random effect, Hausman-Taylor estimation and Arellano-Bond estimation. Based on empirical results we can conclude that income inequality, poverty rate and unemployment have significant effects on the economic growth of a country.

Keywords

• Income inequality
• Economic growth
• unemployment
• poverty rate

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