Economic Growth and Inequality: Non-linearity

By : Mohd Azhar Ud Din Malik , Muzamil Jan

Page No: 399-407

Abstract
This paper studies the impact of nonlinear income distribution on economic growth in the developing world. Understanding whether there is a trade-off between growth and inequality is fundamental in order to pay adequate attention to those policies that fend increases in inequality, which may harm overall growth. Beyond simple organizational identity implied by the cross-country panel regression analyses and Kuznets curve, this work attempts to shed light on the impact and dynamic causal relationship between inequality and economic growth — using vector auto regression (VAR) models and vector error correction model (VECM) for individual economies. The study highlights constituents such as access to legal and credit systems for the poor, which are fundamental for creating an egalitarian society and to eliminate the unfair advantages enjoyed by the rich. It also provides useful means for promoting participation through designing and monitoring programs and projects. Given the increasing challenges of reducing inequalities, economies could create a proper inequality quarry as a binding constraint in achieving economic growth, rather than using strategies like growth first and redistribution later.

Authors :
Mohd Azhar Ud Din Malik
Lecturer, Department of Higher Education, Jammu & Kashmir.

Muzamil Jan
Assistant Professor, Department of Higher Education, Jammu & Kashmir.
 

DOI: https://doi.org/10.32381/PROD.2022.62.04.6