Relation Between Income Inequality and Economic Growth

Abstract

This paper analyzes the effect of income inequality on economic growth. Data on the growth rates of 30 countries and Gini-indexes was used. Three regression models were developed, each looking at different set of variables. The models controlled for country differences in the unemployment and inflation rates, using them as general measures of the stability of the economy. Our results showed no significant relationship. Suggestions for improvement of the models and analysis are discussed.