The Kuznets Hypothesis and Changes in the Income Inequality-Growth Relationship

Authors

  • Fabricio Linhares
  • Roberto Tatiwa Ferreira
  • Guilherme Diniz Irffi
  • Cecília Maria Bortolassi Macedo

Keywords:

Crescimento Econômico, Desigualdade de Renda, Hipótese de Kuznets, Modelos Threshold.

Abstract

This study assesses Kuznets Hypothesis and the heterogeneity in the inequality-growth relationship for a panel of Brazilian States. It refines upon previous work by examining the relationship between inequality and growth in non-linear panel data models. Controlling for other relevant variables, econometric results show that the “U” inverted relationship suggested by Kuznets emerges as a clear empirical regularity in the economies with monthly per capita GDP above R$ 258. For the others, it seems that income growth has no direct effect on inequality. This finding shows that federal public policies have to take more into account the heterogeneous economic dynamics across regions in Brazil.

Published

2013-01-11