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Economist Intelligence Unit, “Democracy Index 2010: Democracy in Retreat,” London, 2010.

has been cited by the following article:

  • TITLE: Inequality and Growth Re-Examined

    AUTHORS: Jacob Assa

    KEYWORDS: Economic Development; Growth; Income Distribution; Inequality

    JOURNAL NAME: Technology and Investment, Vol.3 No.1, February 23, 2012

    ABSTRACT: This paper examines the relationship between income inequality and subsequent economic growth. It builds on the model suggested by Alesina and Rodrik (1994) in which inequality works through greater demands for redistribution to slow down growth, and the idea by Ray (1998) that inequality negatively affects savings, work capacity, economic incentives, and access to and efficiency of credit and financial markets. Using an updated dataset and seven model variants, both OLS and 2SLS regressions find a strong negative effect of income inequality on future growth. The effect is considerably stronger for developing countries, but the existence or absence of democracy has no effect on either the relationship between inequality and growth or on the rate of growth itself. There is also no support for Barro’s (2008) claim that inequality impacts growth positively in developed countries.