Income inequality in the OECD area: On measuring its possible effects on economic growth

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dc.contributorAalto-yliopistofi
dc.contributorAalto Universityen
dc.contributor.authorSiiteri, Martti
dc.contributor.departmentTaloustieteen laitosfi
dc.contributor.departmentDepartment of Economicsen
dc.contributor.schoolKauppakorkeakoulufi
dc.contributor.schoolSchool of Businessen
dc.date.accessioned2015-11-04T13:21:08Z
dc.date.available2015-11-04T13:21:08Z
dc.date.dateaccepted2015-06-01
dc.date.issued2015
dc.description.abstractThis thesis studies possible effects income inequality might have on economic growth and examines whether it is reasonable to measure these effects in detail with the tools provided by growth econometrics. Recently published research indicates a strong negative effect of net income inequality on growth and this thesis assesses whether these findings can be considered reliable and significant. This objective is accomplished by inspecting recent literature concerning the subject with a detailed emphasis on a particular OECD working paper stating a robust negative effect of net income inequality on growth. Said working paper, Cingano (2014), is constructed on the MRW augmented Solow model, which is introduced and assessed. Moreover, the estimation model and method as well as the data sets used in Cingano (2014) are examined in detail. Furthermore, development of income inequality in the OECD area in recent decades and theoretical channels through which income inequality might affect growth are introduced and discussed. This thesis finds that overly specific conclusions about the strength of the estimated effects should not be made based on growth regressions on the subject. This conclusion is reached because the estimates often lack sufficient data and there are problems concerning the estimation models and methods. This thesis finds considerable difficulties concerning Cingano (2014) that are also linked to other literature addressing the effects of income inequality on growth in general. Based on the findings in this thesis, it seems unreasonable to interpret the findings of the literature in such a detailed manner as they are expressed. However, this thesis does not suggest that the subject and research about it lacks importance, but suggests that the focus ought to be directed to micro-level data and channels where genuine progress could be accomplished.en
dc.ethesisid14011
dc.format.extent70
dc.format.mimetypeapplication/pdfen
dc.identifier.urihttps://aaltodoc.aalto.fi/handle/123456789/18337
dc.identifier.urnURN:NBN:fi:aalto-201511054908
dc.language.isoenen
dc.locationP1 I
dc.programme.majorEconomicsen
dc.programme.majorKansantaloustiedefi
dc.subject.helecontaloustieteet
dc.subject.heleconeconomic science
dc.subject.helecontulonjako
dc.subject.heleconincome distribution
dc.subject.helecontasa-arvo
dc.subject.heleconequality
dc.subject.helecontaloudellinen kasvu
dc.subject.heleconeconomic growth
dc.subject.keywordincome inequality
dc.subject.keywordnet income inequality
dc.subject.keyworddisposable income inequality
dc.subject.keywordincome distribution
dc.subject.keywordeconomic growth
dc.subject.keywordeffects of inequality on growth
dc.subject.keywordOECD
dc.subject.keywordGini coefficient
dc.subject.keywordaugmented Solow model
dc.subject.keywordhuman capital
dc.subject.keywordphysical capital
dc.subject.keywordsystem GMM
dc.subject.keywordgrowth econometrics
dc.subject.keywordMRW
dc.subject.keywordCingano (2014)
dc.subject.keywordredistribution
dc.titleIncome inequality in the OECD area: On measuring its possible effects on economic growthen
dc.typeG2 Pro gradu, diplomityöfi
dc.type.dcmitypetexten
dc.type.ontasotMaster's thesisen
dc.type.ontasotPro gradu tutkielmafi
local.aalto.idthes14011
local.aalto.openaccessyes
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