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Economics Research International
Volume 2012 (2012), Article ID 569890, 7 pages
http://dx.doi.org/10.1155/2012/569890
Research Article

Growth and Income Inequality: A Comparative Analysis

Department of Economics, Izmir University of Economics, Sakarya Cad. No.156, Balcova, 35330 Izmir, Turkey

Received 16 August 2011; Revised 10 December 2011; Accepted 10 December 2011

Academic Editor: Russell Smyth

Copyright © 2012 Ayla Ogus Binatli. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

This paper investigates whether the relationship between income inequality and growth changes over time. Two time periods, covering 1970–1985 and 1985–1999, are analyzed and compared. A statistically significant relationship between inequality and growth in either time period fails to emerge. However, there are indications that effect of inequality on growth may be different in the nineties when compared to the seventies. In the literature, a consistent negative effect of inequality on growth is documented although the significance of the effect is open to debate. This paper also finds a negative effect of income inequality on growth in the seventies but, although statistically insignificant, a consistently positive effect in the nineties.