Inequality and Economic Growth: The Empirical Relationship Reconsidered in the Light of Comparable Data

All of the recent empirical work on the relationship between income inequality and economic growth has used inequality data that are not consistently measured. This paper argues that this is inappropriate and shows that the significant negative correlation often found between income inequality and growth across countries is not robust when income inequality is measured in a consistent manner. However, evidence is found of a significant negative correlation between consistently measured inequality of expenditure data and economic growth for a sample of developing countries. Outline 1. Introduction 2. Why would be expect inequality to affect economic growth? 3. Problems with the existing work on income inequality and economic performance 4. Estimating the effect of income inequality on economic growth using consistently measured data 5. Conclusions