Robust Correlates of Growth Spells : Do Inequality and Redistribution Matter?

Theoretical and empirical evidence provides only partial guidance about the relationship between growth, inequality, and redistribution. Much of the problem stems from model uncertainty about what covariates to use, the relationships between them, and the channels through which inequality can affect growth. This paper investigates the relationship between inequality, redistribution, and the duration of growth spells in the presence of a rich set of alternative determinants, by explicitly accounting for model uncertainty using model averaging for duration models. We find that lower net inequality is robustly correlated with longer growth spells. Redistribution appears generally benign for growth spells, but the effect is not robust. In addition, there is no evidence of nonlinearities in the inequality-redistribution-growth spell relationship. Finally, lower initial income, higher secondary education, and higher FDI are associated with longer spell duration