Title: Group patterns in income inequality and economic growth
Authors: Binzhi Chen - University of Birmingham (United Kingdom) [presenting]
Yiannis Karavias - University of Birmingham (United Kingdom)
Marco Barassi - University of Birmingham (United Kingdom)
Abstract: The relationship between income inequality and economic growth has been debated for a long time. The purpose is to take into account the cross-country latent group patterns by using the latest econometrics techniques, Grouped Fixed Effects, to examine the growth-inequality nexus. The estimation results from a broadly balanced panel with 70 economies from 2000-2018 indicate that non-linear effects, heterogeneity and latent group patterns exist simultaneously in the short run. Especially, we find that worldwide economies form three group structures. However, three economies, namely Ireland, Sierra Leone and Zimbabwe, do not have any group patterns with any other economies. The results are valid for both the Gini index, Gini disposable index and Gini market index, respectively. The non-linear relationship is also robust in several robustness checks. The short-run positive impact on economic growth can be treated as a complement to previous studies and Kuznets Curve.