• ISSN: 2010-023X (Print)
    • Abbreviated Title: Int. J. Trade, Economics and Financ.
    • Frequency: Quaterly
    • DOI: 10.18178/IJTEF
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    • Managing Editor: Ms. Inez. Chan

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HOME > Archive > 2024 > Volume 15 Number 4 (2024) >
IJTEF 2024 Vol.15(4): 117-123
DOI: 10.18178/ijtef.2024.15.4.779

An Empirical Study of Income Inequality and Economic Growth: Evidence from the US and China

Hongli Yan
Ulink College Guangzhou ULC, Zhuhai City, China
Email: 1690803261@qq.com

Manuscript received September 18, 2024; revised October 15, 2024; accepted November 13, 2024; published December 10, 2024.

Abstract—The issue of economic growth has always been an issue of concern to the world, and with economic development, income inequality has become more and more serious. Among them, the United States and China, as the two largest economies, the issue of economic growth and income inequality is critical. Therefore, this study analyses the data of GDP growth rate and Gini coefficient of China and the United States from 2008 to 2020 and conducts Ordinary Least Squares (OLS) linear regression analysis on them. Through the discussion of the empirical results, this paper concludes that China’s economic growth has an inverted U-shaped relationship with income inequality, i.e., income inequality promotes economic growth to a certain extent, and when the degree of income inequality is high, it acts as a disincentive to economic growth, and, secondly, the US. economic growth has a positive relationship with income inequality. Further, this paper argues that the empirical results of the US. are consistent with the laws of economic development of developed countries, and some essential characteristics of China’s economic growth are also compatible with the empirical results of this paper. Finally, this paper attributes the reasons for the difference in the relationship between China and the United States to the degree of economic development and institutional and cultural factors and gives relevant suggestions. This study has two significant contributions: firstly, this paper empirically examines the relationship between economic growth and income inequality with the latest data and makes country-by-country comparisons; secondly, this paper analyses the reasonableness of the differences in the impact of income inequality on the economy in different countries and briefly analyses the possible reasons for the differences; all in all, this paper draws valuable conclusions in both empirical and theoretical terms.

 

Keywords—economic growth, income inequality, China and the United States


Cite: Hongli Yan, "An Empirical Study of Income Inequality and Economic Growth: Evidence from the US and China," International Journal of Trade, Economics and Finance, vol.15, no.4, pp. 117-123, 2024.


Copyright © 2024 by the authors. This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).




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