| Description |
1 online resource (28 pages) |
| Series |
IMF working paper ; WP/17/76 |
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IMF working paper ; WP/17/76.
|
| Contents |
Cover; Contents; 1 Introduction; 2 A Brief Review of the Literature; 3 Empirical Strategy; 4 Data, Integration, and Cointegration; 5 Linear or Nonlinear, That Is the Question; 5.1 Inequality Overhang; 5.2 Financial Inclusion; 5.3 Female Labor Participation; 5.4 Robustness; 6 Conclusions; References; A Data Sources and Country Groups; B Regression Results; List of Figures; 1 Evolution of the Unconditional Polynomial Relationship Over Time; 2 Evolution of the Derivative Over Time; 3 Average Conditional Relationship and Derivative |
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4 Variations of the Average Conditional Relationship and Derivative for Different Levels and Changes of Net Gini5 Growth Dividend; 6 Variations of the Average Relationship for Different Levels and Changes of Financial Access; 7 Average Derivative for Varying Levels of Net Gini and Financial Access; 8 Variations of the Average Relationship for Different Levels and Changes of Female Labor Participation; 9 Average Derivative for Varying Levels of Net Gini and Female Labor Participation; List of Tables; 1 Panel Unit Root Tests; 2 Panel Cointegration Tests; A.1 Data Sources |
| Summary |
The linearity of the relationship between income inequality and economic development has been long questioned. While theory provides arguments for which the shape of relationship may be positive for low levels of inequality and negative for high ones, most of the empirical literature assumes a linear specification finding conflicting results. Employing an innovative empirical approach robust to endogeneity, we find pervasive evidence of nonlinearities. In particular, similar to the debt overhang literature, we identify an inequality overhang level in that the slope of the relationship between income inequality and economic development switches from positive to negative at a net Gini of about 27 percent. We also find that in an environment characterized by widespread financial inclusion and high income concentration, rising income inequality has a larger negative impact on economic development because banks may curtail credit to customers at the lower end of the income distribution. On the positive side, a sufficiently high female labor participation can act as a shock absorber reducing such negative impact, possibly through a more efficient allocation of resources |
| Notes |
B.1 Mean Group Estimations |
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Print version record |
| Subject |
Econometric models.
|
|
BUSINESS & ECONOMICS -- Economics -- General.
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BUSINESS & ECONOMICS -- Reference.
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Econometric models
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| Form |
Electronic book
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| Author |
Robles, Adrian, author
|
| ISBN |
9781475590135 |
|
147559013X |
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