relationship between income inequality and gdp per capita
The relationship between income inequality and economic growth in China has obtained enormous attention among economists. DPIBE, Dec 2015 Growth and inequality in China 6 between GDP per capita and the GINI coefficient, Table 2 shows a very clear relationship of these two variables for all those different years. In contrast, Latin ... Economic Growth and Income Inequality Relationship 729 income inequality increases in the initial phase of development and then decreases in … Statement of the Problem . The L shape of the scatter plot was not what I expected. Statutory corporate income tax rate; Statutory corporate income tax rates, 2000 vs 2018; Tax reduction in income inequality (%) Tax revenue; Tax revenue as share of GDP; Tax revenues by source; Taxes on goods and services; Taxes on income vs. taxes on goods and services; Taxes on incomes of individuals and corporations; Top marginal income tax rate Effect of Trade Openness on Real Income and Inequality (a) Real GDP per capita (b) Income ratio (top/bottom decile) 4 The F-statistic can be readily obtained as the square of the t-statistic presented in Figure 2. When the GDP growth rate decreases, the income inequality also decreases. Our main contribution is to disentangle these relationships by the following social expenditure schemes: 1) “old age and survivors”, 2) “incapacity”, 3) “health”, 4) “family”, 5) “unemployment and active labour market policies” and 6) “housing and others”. Most South and East Asian economies grew at higher per capita rates since early 1970 along with rise in income inequality over time.  Kuznets curve diagrams show an inverted U curve, although variables along the axes are often mixed and matched, with inequality or the Gini coefficient on the Y axis and economic development, time or per-capita incomes on the X axis. We include real GDP per capita in the cointegration relation and explicitly deal with cross-sectional dependence in the data that arises due to unobserved common factors. Cointegration is the long-term, or equilibrium, relationship between two series. 4. resource dependence -- is the independent variable. This study applies wavelet coherency analysis to examine the relationship between the U.S. per capita real GDP and six income inequality measures over the period 1917 to 2012. More recent work has updated this research. To ascertain long-run stability of the parameters, we perform the Johansen (1988, 1991) cointegration tests to determine whether the per capita real GDP and each of six income inequality measures cointegrate with each other. Income inequality and its relationship to long-term GDP per capita growth has been researched for decades since the development of the Kuznet’s Curve. In an econometric model that includes an interaction term between initial GDP per capita and income inequality, the coefficient on the interaction term is negative and significantly different from zero at the 1% level. On average, financial development reduces income inequality in the long-run, with the result robust to different measures of finance and across country income groups. Scatter plot of 113 countries comparing wealth vs income inequality. The chart above shows that most countries line up fairly well along the 45-degree line (where relative welfare and income per capita are the same) indicating correlation, but there are significant differences, too. In particular, researchers have noted that there is a correlation between economic growth and reductions in happiness inequality—even when income inequality is increasing at the same time. The main concern of this study is to examine the relationship between per capita national income (economic growth) and income inequality in Nigeria from 1981 to 2017. The study examines the relationship between growth–inequality–poverty (GIP) triangle and crime rate under the premises of inverted U-shaped Kuznets curve and pro-poor growth scenario in a panel of 16 diversified countries, over a period of 1990–2014. relationship between urban level and per capita consumption of natural gas. There is a close relationship between our calculation of per capita welfare for 151 countries in 2014 and per capita income or GDP. On global level, especially after the World War II, income inequality is most frequent global debate topic. Downloadable! We estimate a panel model where the relationship between inequality and GDP per capita growth depends on countries’ initial incomes. In fact, there exists a threshold level for per capita GDP. Wavelet analysis allows the simultaneous examination of correlation and causality between the two series in both the time and frequency domains. The visualization below, from Clark, Fleche and Senik (2015) 4 shows this. The results show that the impact is invariably negative and statistically significant: a 1% increase in inequality lowers GDP by 0.6% to 1.1%. (2006) employ the income ratio between urban and rural resident as a measure of income inequality and conclude that the income inequality is negatively associated to the long-run economic growth. This shift would lead to the inverted U-shaped relationship between real GDP per capita and inequality. This analysis examines the relationship between nonrenewable resource dependence, economic growth and income inequality. This analysis examines the relationship between nonrenewable resource dependence, economic growth and income inequality. Indeed, according to Kuznets, there is a slow change from a low-inequality, low-income, agricultural economy, towards a high-income and medium-inequality economy characterized by industrial production. Figure 3. Theoretical and empirical research has shown mixed results including positive, negative, non-existent, or statistically insignificant relationships. Preston studied the relationship for the 1900s, 1930s and the 1960s and found it held for each of the three decades. Abstract. We estimate the long-run growth effect of financial development on income inequality using the between-dimension group-mean panel dynamic ordinary least squares (DOLS) estimator of … From 1997, it shows that with a lowest GDP If the per capita GDP is above this threshold, income inequality facilitates economic growth; otherwise, it hurts economic growth. The findings confirm that there exists an inverted U-shaped relationship between per capita GDP and natural gas consumption. It uses a two-equation system in which the Gini index and GDP per capita are the dependent variables and the stock of nonrenewable resources as a share of national wealth -- i.e. Wan et al. Kuznets believed that inequality would follow an inverted "U" shape as it rises and then falls again with the increase of income per-capita. run relationship between income inequality, financial development (on all measures) and real GDP per capita. The red square is the United States. To test this idea, we looked into patterns of per capita income, inequality, and happiness in two datasets containing data from 34 countries. The total fertility rate is the expected number of births a woman would have over the course of her life. The theoretical structure of this research analyzes such concepts as economic growth, income inequality and the relationship between the two. The hypothesis is that there exists a linear relationship between income inequality and annual GDP growth rate. This relationship can be either positive or negative, depending on per capita GDP. On the other hand, only 2 to 7 per cent of the total global income is earned by the poorest 10 per cent. resource dependence—is the independent variable. In this article, we study how social expenditure is related to poverty, income inequality and GDP growth. Keywords: Natural Gas Consumption, Rural and Urban Income Inequality, Quality of Environment, Generalized Method of Moments For example, Mexico and Turkey have comparable levels of per capita income GDP (around $15,000 in 2010) but very different income distributions as measured by their Gini coefficients (around 0.52 and 0.40, respectively). The study employed panel Generalized Method of Moments (GMM) estimator for robust inferences. However, many countries don't have a recent Gini index (1987 to 2003) while GDP per capita is … This analysis examines the relationship between nonrenewable resource dependence, economic growth and income inequality. resource dependence -- is the independent variable. (Income inequality is plotted on the X-axis, and the correlation between happiness and economic output is on the Y-axis.) It uses a two-equation system in which the Gini index and GDP per capita are the dependent variables and the stock of nonrenewable resources as a share of national wealth -- i.e. First, we compile a more extensive data set covering 87 countries over 26 (minimum) to 58 (maximum) years during the period 1960-2017 and use measures for both pre-tax and post-tax income inequality. The figure below shows the relationship between fertility (more specifically, the total fertility rate) and gross domestic product (GDP) per capita (measured in 2010 U.S. dollars) across countries in 2000. The reason seems to be that nations today are surprisingly capable in converting the available national income (measured as GDP/capita) into a longer lifespan for the people (measured as Life expectancy at birth) and into access to education (measured by mean of years of schooling for adults aged 25 years and expected years of schooling for children of school entering age). This analysis examines the relationship between nonrenewable resource dependence, economic growth and income inequality. Wavelet analysis allows the simultaneous examination of correlation and causality between the two series in both the time and frequency domains. Estimates of the model show that the relationship between inequality and GDP per capita growth is significantly decreasing in countries’ initial incomes. So, in OECD countries at least, higher levels of inequality can reduce GDP per capita. 5. We extend their work in two respects. While the average effect of income inequality on GDP per capita is negative and significantly different from zero, it varies with countries’ initial income level. First, most of the In addition, lnINE, lnY, lnINF, lnG, and lnFD indicates the natural log of Gini coefficient as a proxy for income inequality, the real gross domestic product (GDP) per capita measured in constant 2010 US dollar as a proxy for economic growth, consumer price index as a proxy for inflation, government expenditures' share in GDP, and financial development indicators. Downloadable (with restrictions)! The Preston curve is an empirical cross-sectional relationship between life expectancy and real per capita income.It is named after Samuel H. Preston who first described it in 1975. The researchers measured this across two major categories of It uses a two-equation system in which the Gini index and GDP per capita are the dependent variables and the stock of nonrenewable resources as a share of national wealth—i.e. relationship between inequality and per-capita income. This study applies wavelet coherency analysis to examine the relationship between the U.S. per capita real GDP and six income inequality measures over the period 1917 to 2012. The fitted line slopes down and toward the right, indicating a … The well-known curvilinear relationship between GDP and life expectancy which shows little return to income after a country reaches roughly $10,000 per capita wealth (Wilkinson, 1996) also seems to apply to mental well-being where the impact of inequality becomes more important to outcomes at higher levels of country wealth. 5 One should be cautious in interpreting changes in the estimated coefficients for two reasons.