Inequality Undermines Democracy and Growth

In Luigi Paganetto (ed.), Yearning for Inclusive Growth and Development, Good Jobs and Sustainability, Springer 2019.

Abstract

This paper aims to show that income equality and interpersonal trust go along with several other facets of social capital as determinants of economic growth across countries as reflected in the purchasing power of per capita GNI. In a large sample of countries, equality in the distribution of income as measured by the World Bank and by The Standardized World Income Inequality Database is shown to go along with economic diversification, the rule of law, transparency as measured by the corruption perceptions index, trust as measured in the World Values Survey, and democracy all of which are good for growth.