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The inequality-growth relationship: Evidence from a panel of Canadian regions

TitleThe inequality-growth relationship: Evidence from a panel of Canadian regions
Year of Publication2017
AuthorsMarchand, Y., Breau S., and Essletzbichler J.
JournalDonald J. Savoie Institute
Abstract

This paper investigates the effects of income inequality on regional economic growth in Canada over the 1981 to 2011 period. Using standard cross-sectional models, the consistent pattern we find is that regions with initially higher levels of inequality do subsequently experience greater average annual growth rates over the long-run. In contrast, the short-/medium-term responses are different. Results from fixed effects models point to a negative relationship between inequality and growth. Moreover, across both types of models, we find significant differences for urban and rural regions.

Document URLhttp://idjs.ca/images/Manuscript_IDJS.pdf