The Effects of Income Inequality and Redistribution in Democracies: A Dynamic Panel Data Approach

Goksu Aslan

DOI: http://dx.doi.org/10.12775/DEM.2017.002

Abstract


In this paper, the simultaneous effects of the inequality and redistribution on economic growth are tested for the whole sample and for a subset of democratic countries, following system-GMM estimation on a panel dataset over a period from 1960 to 2010. Overall, net inequality has a negative significant effect on subsequent 5 years for both samples, while redistribution impact is only significant in democracies. The findings are related to the fact that in democracies, the governments tend to significantly redistribute more.

Keywords


democracy; economic growth; inequality; redistribution

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References


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