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.
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.