What Factors Affect Income Inequality and Economic Growth in Middle-Income Countries?

摘要

Income inequality in many middle-income countries has increased at an alarminglevel. While the time series relationship between income inequality and economic growth hasbeen extensively investigated, the causal and dynamic link between them, particularly for themiddle-income countries, has been largely ignored in the current literature. This study was conductedto fill in this gap on two different samples for the period from 1960 to 2014: (i) a full sample of 158countries; and (ii) a sample of 86 middle-income countries. The Granger causality test and a systemgeneralized method of moments (GMM) are utilized in this study. The findings from this studyindicate that causality is found from economic growth to income inequality and vice versa in bothsamples of countries. In addition, this study also finds that income inequality contributes negativelyto the economic growth in the middle-income countries in the research period.