The Dynamic Relationship between Income Inequality and Economic Growth from the Perspective of Distribution Economics
Description
The objective of this study is to investigate the dynamic relationship between income inequality (ICIE) and economic growth (EG) from the perspective of distribution economics. By developing a comprehensive dynamic model, the study examines this relationship across different countries and regions. Utilizing various econometric methods, including panel data regression analysis, dynamic panel models, and structural equation models, empirical tests are conducted using panel data from 30 provinces in China spanning the period 2014-2023. The results reveal a significant negative correlation between ICIE (measured by the Gini coefficient) and EG (per capita Gross Domestic Product growth rate), with an average ICIE of 0.49 and a standard deviation of 0.26, indicating considerable variability within the sample. Furthermore, the findings suggest that reducing ICIE can foster robust EG by stimulating consumer demand, promoting human capital accumulation, and ensuring social stability (P<0.01). Therefore, reducing ICIE is of great importance for promoting healthy EG and provides scientific evidence for policymakers to improve income distribution and promote sustainable EG.