CBE Research Seminar Series: Inequality and Growth: Evidence from Transition Economies

Edgar Begrakyan presents his research on  the relationship between income inequality and economic growth in transition economies. The evidence about this interplay is ambiguous and this study contributes to the existing empirical works with its findings. The novelty of the research is that it uses new comparable inequality dataset where measurement errors are less problematic than the previous ones, all while exploring this nexus for transition economies from 1990 to 2010. He use Gini indices (net and market) as a proxy for income inequality from the Standardized World Income Inequality database. 

 

The estimations are made using fixed effects and random effects models in order to control for cross-country unobservable variables, conducting Hauseman tests to compare the fixed effects and random effects models from the point of view of efficiency and consistency. According to the tests, the fixed effects models are preferable and the estimated parameters show that an increase in income inequality has a significant negative relationship with economic growth.