An Econometric Analysis of the Links Between Income Inequality and Economic Growth

Abstract

This study investigates temporal demographic changes and income inequalities, and more importantly the relationship between income inequality and economic growth inWest Virginia. Departing from earlier studies, a regional growth model is utilized and empirically tested using county level West Virginia data (1990-2000). Results suggest that per-capita income change is positively related to population and employment changes but negatively related to income inequality. This empirical evidence indicates that higher income inequality can potentially hinder economic growth.