The effects of Income Inequality on Economic Growth

Abstract: The effect of income inequality has been controversial issue for decades, which researchers have concluded conflicting results. Many researchers have found that income inequality is conducive on economic growth, while others found harmful effect. Hence, this paper investigates the impact of income inequality on economic growth by using the cross sectional analysis. The averaged data from periods of 2002-2006 were used and observations from 90 developed and developing countries were also used. We find that income inequality is negatively associated in economic growth.