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Inkomstfördelningens roll för den ekonomiska tillväxten

Lindqvist, Sofia LU (2011) NEKM09 20111
Department of Economics
Abstract
This essay investigates the impact of income inequality on economic growth in developed countries. The link is primarily investigated through the possible influence of income inequality on the four growth channels savings, human capital, population growth and labor force productivity. A theoretical model, based on an extended version of the Romer model, is presented, where a higher degree of income inequality leads to a higher growth rate in GDP per capita in steady state. This higher growth rate can be explained by the theoretical model’s predictions that a higher degree of income inequality leads to a higher share of human capital in the educational sector and higher population growth. The theoretical model also predicts a correlation... (More)
This essay investigates the impact of income inequality on economic growth in developed countries. The link is primarily investigated through the possible influence of income inequality on the four growth channels savings, human capital, population growth and labor force productivity. A theoretical model, based on an extended version of the Romer model, is presented, where a higher degree of income inequality leads to a higher growth rate in GDP per capita in steady state. This higher growth rate can be explained by the theoretical model’s predictions that a higher degree of income inequality leads to a higher share of human capital in the educational sector and higher population growth. The theoretical model also predicts a correlation between higher income inequality and aggregate savings and finally a positive correlation with labor force productivity.
In addition, an empirical investigation is performed where panel data from 26 European countries between the years 1995 and 2009 is used in panel least squares - and panel two stage least squares regressions. The findings from the empirical investigation support the theoretical model, showing that a higher degree of income inequality has a positive effect on economic growth. The results also indicate a positive relationship between a higher degree of income inequality and the share of human capital in the educational sector. The effect on aggregate savings is also significantly positive. The effect from income inequality on population growth is however ambiguous, depending on measures used. Finally, no significant effect on labor productivity can be shown. (Less)
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author
Lindqvist, Sofia LU
supervisor
organization
course
NEKM09 20111
year
type
H1 - Master's Degree (One Year)
subject
keywords
income inequality, economic growth, developed countries, Romer model, regression analysis
language
Swedish
id
2117790
date added to LUP
2011-09-06 14:25:26
date last changed
2011-09-06 14:25:26
@misc{2117790,
  abstract     = {This essay investigates the impact of income inequality on economic growth in developed countries. The link is primarily investigated through the possible influence of income inequality on the four growth channels savings, human capital, population growth and labor force productivity.  A theoretical model, based on an extended version of the Romer model, is presented, where a higher degree of income inequality leads to a higher growth rate in GDP per capita in steady state. This higher growth rate can be explained by the theoretical model’s predictions that a higher degree of income inequality leads to a higher share of human capital in the educational sector and higher population growth. The theoretical model also predicts a correlation between higher income inequality and aggregate savings and finally a positive correlation with labor force productivity. 
In addition, an empirical investigation is performed where panel data from 26 European countries between the years 1995 and 2009 is used in panel least squares - and panel two stage least squares regressions. The findings from the empirical investigation support the theoretical model, showing that a higher degree of income inequality has a positive effect on economic growth. The results also indicate a positive relationship between a higher degree of income inequality and the share of human capital in the educational sector.  The effect on aggregate savings is also significantly positive. The effect from income inequality on population growth is however ambiguous, depending on measures used.  Finally, no significant effect on labor productivity can be shown.},
  author       = {Lindqvist, Sofia},
  keyword      = {income inequality,economic growth,developed countries,Romer model,regression analysis},
  language     = {swe},
  note         = {Student Paper},
  title        = {Inkomstfördelningens roll för den ekonomiska tillväxten},
  year         = {2011},
}