Can a relation be found between inequality and growth?

National development initiative most influential in income and distributional change

Economics has long been looking at the link between distribution and production. This paper takes a look at a number of stylised facts put forward by the theoretical literature on income inequality. Particular attention is paid to the effects of specification choices, estimation method and sample selection.

Econometric tests reveal that there is no robust relation running from income inequality to per capita product growth or physical and human investment. The paper also finds that there would appear to be more grounds for an inverse causal relation, akin to the Kuznets curve theory. The overall conclusion of the paper is that the national development strategies and structural and historical configurations of each society still play a major role in determining concurrent changes in income and its distribution. [adapted from author]

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Can a relation be found between inequality and growth?