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Trading places: Does past growth impact inequality?
Institution:1. World Bank, Development Research Group, 1818 H Street, NW Washington DC 20433 USA;2. Department of Economics, University of Virginia, P.O. Box 400182, Charlottesville, VA 22904-4182, USA
Abstract:Using a broad panel dataset and semiparametric methods, the impact of past economic growth on current income inequality is examined. Increases in past short-run or medium-run growth rates raise current inequality. However, there is an inverted “U”-shaped relationship between past long-run growth and current inequality. Increases in past long-run growth rates raise current inequality in slow-growing economies and reduce current inequality in rapidly growing economies.
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