Income Distribution Polarization and Economic Growth: Channels and Effects

Developing and transitional economies usually experience high levels of income polarization during the period of transition and rapid economic growth. Understanding and quantifying its effects on the economy is important to developmental strategies. In this paper, we study the effect of income distribution polarization on GDP growth and its transmission channels. We also suggest some strategies to deal with the problem in view of our results and the experiences of income redistribution policies in developed countries.