The Impact of Income Inequality on Economic Growth in Vietnam: An Empirical Analysis

Abstract

This paper tests the theoretical models proposed in the literature to explain the impact of income inequality on economic growth at the provincial level in Vietnam. The results show a weak direct link between initial inequality and subsequent economic growth. However, income inequality affects economic growth through several channels. There is strong empirical support for the negative impact of inequality on growth via the education/fertility channel. The data also supports capital market imperfection. By contrast, there appears to be less empirical support for explanations based on the distribution channel. The results indicate that the channels through which income inequality leads to higher economic growth are offset by the opposing channels through which inequality harms growth. Based on the findings the paper proposes policy measures that could be implemented by the government to narrow the gap between the rich and the poor in Vietnam and ensure a fairer distribution of economic resources. Contribution/ Originality: This paper is one of few studies to have investigated the impact of income inequality on economic growth as well as the channels through which income inequality affects economic growth in Vietnam. The paper's primary contribution is finding that income inequality affects economic growth through the capital market imperfection and education/fertility channels.

Apakah Kunjungan Wisata, Tingkat Pengangguran, Dan Nilai Ekspor Berpengaruh Terhadap Pendapatan Domestik Regional Bruto (Studi Kasus: Sebelum Dki Jakarta Menghadapi Covid-19)

“…Perkembangan ekonomi menampilkan sepanjang mana kegiatan perekonomian hendak menciptakan bonus pemasukan warga pada sesuatu periode tertentu, sebab pada dasarnya kegiatan perekonomian merupakan sesuatu proses pemakaian faktor-faktor penciptaan buat menciptakan output, hingga proses ini pada gilirannya hendak menciptakan sesuatu aliran balas hasa terhadap aspek penciptaan yang dipunyai oleh warga (Campos et al, 2019). Terdapatnya perkembangan ekonomi hingga diharapkan pemasukan masyarakat selaku owner aspek penciptaan pula hendak ikut bertambah (Le & Nguyen, 2019).…”

Income Inequalities in Capitalistic and Socialistic Economies: “An empirical evidence from capitalistic and socialistic countries

“…Aiyar and Ebeke (2019) posit that economic growth and income inequality are undesirably conditioned except those countries where economies are witnessing equality of opportunities. Le and Nguyen (2019) also reveal a weak and direct analogy between initial income inequality and economic ensuing growth followed by the unfair demarcation of the resources in the economy. Kennedy et al (2017) find an adverse impact of income inequality on economic growth.…”

The Effect of Entrepreneurship on the Sustainability of Social Small and Medium Enterprises (SMEs) - Between the Mediating Effects of Government Support Policy in Korea

“…In the third stage, risk-taking, Innovative partial mediation, Social Value Orientation and Empathy complete mediation were shown in the relationship between Social SME Entrepreneurship and Sustainability of social SMEs. The following [Figure 2] shows the result of the impact analysis of the relationship between Social SME Entrepreneurship and Korea Government Support Policy (Langa and Govender, 2019); (Le and Nguyen, 2019).…”