Income inequality and economic growth——the Kuznets curve revisited

In a neoclassical growth framework with a typical political-economy mechanism, this paper reexamines the relationship between the income inequality and economic growth by introducing government spending into the production function and the utility function. It demonstrates that Kuznets’ famous inver...

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Bibliographic Details
Published in:Frontiers of economics in China 2006-06, Vol.1 (2), p.196-206
Main Authors: Heng, YIN, Liutang, GONG, Heng-fu, ZOU
Format: Article
Language:English
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Summary:In a neoclassical growth framework with a typical political-economy mechanism, this paper reexamines the relationship between the income inequality and economic growth by introducing government spending into the production function and the utility function. It demonstrates that Kuznets’ famous inverted-U shape relationship between inequality and economic growth will hold—the growth rate will be first increasing with the income inequality before the growth rate decreases with inequality.
ISSN:1673-3444
1673-3568
DOI:10.1007/s11459-006-0004-7