Effects Of Inequality On Economic Growth

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The relationship, as to if income inequality reduces economic growth, is one that has been closely looked at by various economists over the years. Most of them conduct studies to find a negative correlation between inequality and overall growth. In this essay I will debate the effects of inequality on economic growth and vice versa, if such effects occur. I will also explore how inequality is measured and why the existing studies into this issue need to be inferred with attention as measures of inequality can be inconsistent. Inequality is measured in different ways using data on income (gross and net) or expenditure. The unit of measurement can also vary from the individual or the household etc. [2] Due to this variation, we would expect to attain different measures of inequality according to which of the above arrangements is used. It is important to use data that is constantly measured in empirical studies. For example all countries inequality would be measured using gross income. Empirical work should not consist of data that are, for example, based on income for some countries a...

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