This paper empirically examines the effect of income inequality on economic growth in a sample of 69 high income economies. It uses an improved inequality dataset developed by the World Institute for Development Economics Research and panel estimation techniques in an ordinary least squares regression. The results provide robust empirical evidence that rising levels of income inequality have adverse effects on growth in high income countries and indicate that, on average, a one standard deviation increase in income inequality will decrease growth by 67.91%. Results from the regression also suggest increases in human capital and international openness, decreases in the government consumption ratio, and more favorable terms of trade promote growth while higher initial per capita GDP and higher levels of investment retard growth.
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Bachelor of Arts (B.A.)
College of Business Administration
Business Administration -- Dissertations, Academic;Dissertations, Academic -- Business Administration
Length of Campus-only Access
Honors in the Major Thesis
McGuire, Joshua, "Inequality as a determinant of growth in a panel of high income countries" (2012). HIM 1990-2015. 1281.