Ruth-Aïda Nahum: Institute for Futures Studies, Postal: Box 591, SE-101 31 Stockholm, Sweden
Abstract: This paper explores the relationship between income inequality and growth using panel data on Swedish counties from 1960-2000. Compared to standard methods of estimating this relationship yearly regional level data are used, and inequality is allowed to be endogenous. We find a significant positive impact of inequality on growth, but the magnitude of the effect decreases with the length of the growth period studied. When allowing income inequality to be endogenous, using a panel 2SLS IV estimation, we find positive effect of inequality on 1 to 5-year growth rates, when significant, whereas the effect on 10-year growth rates are not clear cut.
43 pages, March 2005
Price: 25 SEK
Note: ISSN 1652-120X ISBN 91-89655-61-3
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