How does income inequality affect economic growth pdf

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also quite a bit of attention in policy circles. Abstract. To speak to those debates, this paper provides estimates. Income inequality is multifaceted and is not the inevitable outcome of 1 day ago · Specifically, we find that, on average, apercentage point increase in the Gini coefficient reduces GDP per capita by around % over a five-year period; the long-run (DOI: /x) To address the slowdown in growth from an inequality perspective, this study applies a comprehensive dataset with strong comparability and a dynamic panel threshold model to explore the effect of income inequality on economic growth, its channels of influence, and differences in channels Economic growth reduces poverty if income distribution remains constant over timeThe initial level of poverty has a negative effect on growth rates, and a high poverty rate also weakens the effect of growth on reducing povertyGiven the trade-off between poverty and inequality, it seems advisable to use in anti-poverty policies the To address the slowdown in growth from an inequality perspective, this study applies a comprehensive dataset with strong comparability and a dynamic panel threshold model to explore the effect of income inequality on economic growth, its channels of influence, and differences in channels due to country differences, considering income level FigureIncome inequality increased in most, but not all OECD countries FigureInequality increased over the long run but temporarily stalled during the first crisis years FigureEstimated consequences of changes in inequality on cumulative per capita GDP growth However, regarding the relationship of income inequality and economic growth, we obtain a positive and statistically significant relationship between income inequality and economic growth in Growth effects of income inequality according to theory. The influence of income inequality on the development of real gross domestic product is transmitted through a number of mechanisms, and is not unambiguous. An in-crease in income inequality can have both growth-promoting and growth-dampening effects (see Fig) In both developed and developing economies, the income inequality gap (as measured by the ile ratios and the Gini coefficient based on the Lorenz curve) between rich and poor is at high levels, and continues to rise [24] The effect that income inequality has on economic growth has recently received. of the relationship between income inequality and GDP per capita for different levels of countries' initial incomes Rising income inequality is one of the greatest challenges facing advanced economies today.