Economic Growth and Income Inequality Nexus: An Empirical Analysis for Pakistan

Majeed, Muhammad Tariq (2016): Economic Growth and Income Inequality Nexus: An Empirical Analysis for Pakistan. Published in: Kashmir Economic Review , Vol. 25, No. 1 (30 June 2016): pp. 1-12.

Abstract

This study investigates the impact of income inequality on economic growth in Pakistan using annual time series data from 1975 to 2013. The empirical analysis for the effect of income inequality on economic growth is based on the ARDL approach to cointegration. The empirical findings show that inequality exerts significantly positive influence on annual economic growth of Pakistan. It implies that annual growth is not driven by the poor which is also confirmed by the negative influence of poverty on growth. Though inequality exerts positive influence on growth but such type of growth cannot be sustained as the poor are not part of the growth process.

• Item Type: MPRA Paper
• Language: English
• Keywords: economic growth, income inequality, poverty, Pakistan
• Subjects: D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General

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