CharlesColl, Jorge A. (2010): The optimal rate of inequality: A framework for the relationship between income inequality and economic growth.
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Abstract
This paper contributes to the debate over the relationship between inequality and growth by proposing that the disparities in empirical studies derive from the fact that they have not accounted for the level of inequality as a factor that can affect the sign of the relationship. An inverted “U” shaped relationship is demonstrated, showing that low levels of inequality exert a positive correlation with economic growth while high levels have a negative one. Additionally, and more importantly, it is demonstrated the existence of an optimal rate of inequality (ORI) that maximizes growth rates and releases the economy from any distortion generated by elevated inequality or taxation. Empirical evidence from a broad panel of countries as well as a bibliometric analysis is presented to validate these propositions.
Item Type:  MPRA Paper 

Original Title:  The optimal rate of inequality: A framework for the relationship between income inequality and economic growth 
Language:  English 
Keywords:  Inequality, Growth, Redistribution, Optimal Rate of Inequality 
Subjects:  E  Macroeconomics and Monetary Economics > E2  Macroeconomics: Consumption, Saving, Production, Employment, and Investment > E25  Aggregate Factor Income Distribution D  Microeconomics > D3  Distribution > D31  Personal Income, Wealth, and Their Distributions D  Microeconomics > D3  Distribution > D33  Factor Income Distribution O  Economic Development, Technological Change, and Growth > O1  Economic Development > O15  Human Resources; Human Development; Income Distribution; Migration 
Item ID:  28921 
Depositing User:  Jorge Alberto Charles Coll 
Date Deposited:  15. Feb 2011 22:33 
Last Modified:  05. Apr 2013 06:43 
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URI:  http://mpra.ub.unimuenchen.de/id/eprint/28921 
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