Does Income Distribution Affect U.S. State Economic Growth?*
Mark D. Partridge,
Mark D. Partridge
University of Saskatchewan, Saskatoon, SK S7N 5A8, Canada. E-mail: [email protected]
Search for more papers by this authorMark D. Partridge,
Mark D. Partridge
University of Saskatchewan, Saskatoon, SK S7N 5A8, Canada. E-mail: [email protected]
Search for more papers by this author*
The author thanks Thomas Mielke for his research assistance; three anonymous referees, the Editor Marlon Boarnet, Donald Freeman, Jamie Partridge, Dan Rickman, and session participants at the 2002 Western Economics Association International Meetings in Seattle for valuable comments; and Ugo Panizza for suggestions and use of his inequality data.
Abstract
Abstract. Numerous models propose an income-distribution/growth linkage, but the empirical evidence is ambiguous and depends on the regression approach. Mixed findings are not unexpected if there are differing short- and long-term responses. Approaches utilizing cross-sectional variation primarily reflect long-run effects, whereas those using time-series variation primarily reveal short-run effects. This study reconciles these issues using U.S. state data. After allowing for short- and long-run responses and for separate effects between the tails and middle of the distribution, the consistent pattern is the middle-class share and overall inequality are positively related to long-run growth. However, the short-run income-distribution response is less clear.
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