Is the Kuznets curve still evident in Asia? a cross country analysis on inequality, economic growth, and non-income determinants of income distribution
Date
2010-10
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Abstract
Rapid economic growth and optimistic inequality outcomes characterized Asian economies over the recent decades. There has been an emergent discourse whether economic growth may improve equality of incomes. To test the relationship between economic growth and income inequality, the Kuznets Curve hypothesis could be used The hypothesis suggests an inverted-U relationship between income per capita and inequality measures. Thus, the main objective of this study is to verify empirically the existence of this pattern in Asia In the cross- section analysis, GDP per capita and Gini coefficients are used to test the validity of Kuznets Curve in Asia for the period 2002 to 2005. It has been shown empirically that countries with relatively high economic development have low income inequalities, and vice versa. The empirical results validate the existence of the Kuznets Curve in Asia Furthermore, it has been found that institutional, demographic, political, and macroeconomic policy variables may influence inequality though their effects may not be significant in the case of the Asian countries. Specifically, gender parity index, population growth rate, political stability, and exports as percentage of GDP are negatively correlated with the level of inequality while employment ratio is positively correlated with income inequality.
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Keywords
Kuznet curve, Inequality, Economic growth, Non-income determinants, Income distribution