Does Improving Income Distribution Decelerate Economic Growth in OECD Countries?

Abdullah Keskin, Gökhan Demirtaş

Abstract


This study aims to search the effect of income distribution on economic growth in industrialized countries. For this purpose, cross-section and panel data analyses are applied on the data of 35 OECD countries for the period between 2004-2014. Gini coefficients in the models represent second income distribution calculated after taxes and transfers. Findings obtained from both panel and cross-section models show that decreases in Gini coefficient slow economic growth rate in OECD countries. This result implies that improvement in income distribution requires devotion as reduction in economic growth in industrialized countries. Thus, the policies improving income distribution should be preferred after the policies stimulating economic growth in the industrialized countries with low economic growth rate.

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