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Income inequality and economic growth——the Kuznets curve revisited |
YIN Heng1, GONG Liutang2, ZOU Heng-fu2 |
1.School of Economics, Beijing Normal University, Beijing, 100875, China; 2.Guanghua School of Management, Peking University, Beijing, 100871, China |
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Abstract 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.
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Issue Date: 05 June 2006
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