Effects of Inequality on the Process of Economic Growth and Human Development: A Threshold Analysis
(2021) NEKP01 20211Department of Economics
- Abstract
- Theory is still inconclusive to what level income inequality affects economic growth, with little research accounting for the effects of human development. The paper aimed to analyze both the effects of income inequality on growth while controlling for the underlying effects of different human development indicators. This was done by using data of 55 countries for the period 1990-2019, with results being twofold. First, results from the applied panel threshold regression show that there exists a threshold of human development boosting and mitigating effects of income inequality towards economic growth in a beneficial way. Secondly, after splitting the sample into developed and developing countries, a general positive influence of... (More)
- Theory is still inconclusive to what level income inequality affects economic growth, with little research accounting for the effects of human development. The paper aimed to analyze both the effects of income inequality on growth while controlling for the underlying effects of different human development indicators. This was done by using data of 55 countries for the period 1990-2019, with results being twofold. First, results from the applied panel threshold regression show that there exists a threshold of human development boosting and mitigating effects of income inequality towards economic growth in a beneficial way. Secondly, after splitting the sample into developed and developing countries, a general positive influence of inequality for developing countries has been identified, while developed countries showed tendencies for a negative one. The results are in general robust to the use of different indices for human development, proving the importance of dealing with income disparities regarding economic growth. The empirical results suggest that income inequality does not necessarily hurt economic growth, while human development plays an important role nether less of the influence. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9043504
- author
- Heigert, Kilian LU
- supervisor
-
- Klas Fregert LU
- organization
- course
- NEKP01 20211
- year
- 2021
- type
- H2 - Master's Degree (Two Years)
- subject
- keywords
- Kuznets curve, panel threshold model, human development, economic growth
- language
- English
- id
- 9043504
- date added to LUP
- 2021-07-05 13:21:39
- date last changed
- 2021-07-05 13:21:39
@misc{9043504, abstract = {{Theory is still inconclusive to what level income inequality affects economic growth, with little research accounting for the effects of human development. The paper aimed to analyze both the effects of income inequality on growth while controlling for the underlying effects of different human development indicators. This was done by using data of 55 countries for the period 1990-2019, with results being twofold. First, results from the applied panel threshold regression show that there exists a threshold of human development boosting and mitigating effects of income inequality towards economic growth in a beneficial way. Secondly, after splitting the sample into developed and developing countries, a general positive influence of inequality for developing countries has been identified, while developed countries showed tendencies for a negative one. The results are in general robust to the use of different indices for human development, proving the importance of dealing with income disparities regarding economic growth. The empirical results suggest that income inequality does not necessarily hurt economic growth, while human development plays an important role nether less of the influence.}}, author = {{Heigert, Kilian}}, language = {{eng}}, note = {{Student Paper}}, title = {{Effects of Inequality on the Process of Economic Growth and Human Development: A Threshold Analysis}}, year = {{2021}}, }