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Poverty, Income Inequality and Economic Growth in U.S. Counties: - page 25 / 33





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rich counties respectively. Thus, the overall results from the analysis confirm that initial

level of inequality and poverty hamper economic growth. At the same time, economic

growth lowers the end of the period income inequality and poverty, and the results do not

differ across rich and poor counties.


6. Conclusion

In this study, I explore the relationship among poverty, income inequality and

growth in U.S. counties. The results present evidence that counties with high levels of

inequality and poverty in 1979 experienced less economic growth between 1979 and

1999. This result that is consistent with most cross-country studies that show initial level

of poverty and income inequality retards economic growth. The results also show that

counties with higher economic growth between 1979 and 1999 had less income

inequality and poverty in 1999, compared to others. An important offshoot of this

exercise has been the construction of the Gini inequality index for all the U.S. counties

for the years 1979 and 1999.

The spatial analysis also confirms that counties exhibit strong spatial dependence

and spatial (location) parameters are found to be significant determinants of economic

growth, poverty and income inequality in the U.S. counties. The relationship among

poverty, inequality and subsequent economic growth does not differ among counties

depending on their income levels, as suggested by some cross-country studies. The

instructive result from this study is that policies that promote economic growth need not

necessarily lead to a widening income inequality in the U.S. counties. Thus, policies

15 As a part of robustness check, I use other measures of inequality such as Atkinson and Theils entropy measure, the results do not change. I also include labor force participation in different sectors, such as agriculture, finance, I.T., and the results do not change much either.


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