Economic Development and Income Inequality : Findings from Regional Panel Data Analyses
The inequality-economic development nexus has been the focus of a number of research undertakings in the past. Nonetheless, the variations in regional dynamics are still arguably understudied. Employing semi-parametric regressions, this research finds that the classical hypothesis of Kuznets is not well-established in all regions of the world. This reflects the heterogeneities present across economies and regional groups. The regions where the inverted U-shape relationship between income inequality and economic development (Kuznets hypothesis) can be observed are East Asia and the Pacific and Latin America and the Caribbean. In Sub-Saharan Africa, South Asia, Europe and Central Asia, the data suggest an N-shape relationship. In the Middle East and North Africa, the data interestingly present a negative correlation. Meanwhile, in North America inequality appears to increase as the real income per capita increases