Threshold effects of inequality on economic growth in the US states: the role of human capital to physical capital ratio

Çepni, Oğuzhan; Gupta, Rangan; Lv, Zhihui

doi:10.1080/13504851.2019.1696449

Cited by 5 publications

(2 citation statements)

References 22 publications

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“…As health investment may crowd out physical capital investment and affect the accumulation of physical capital, Gong et al ( 34 ) found that excessive investment in health may have a negative impact on economic growth. Çepni et al ( 35 ) proved that the effect of human capital on economic growth is positive when the ratio of human capital to material capital is low, whereas if it exceeds a threshold, the effect becomes negative. Zhang et al ( 36 ) also pointed out the existence of this threshold effect.…”

Section: Literature Reviewmentioning

confidence: 99%

Can Health Human Capital Help the Sub-Saharan Africa Out of the Poverty Trap? An ARDL Model Approach

Wang

Hua

Tao

et al. 2021

Front. Public Health

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This article explores the impact of health human capital on the poverty trap in Sub-Saharan Africa by autoregressive distribution lag model. In the long run, there is no evidence that health human capital can help the Sahara out of the poverty trap. While health human capital has a significant effect on poverty reduction in the short term. There is a threshold effect in the poverty reduction model of healthy human capital. When the economic development level reaches the threshold, the effect of poverty reduction is more obvious and deeper. The extended Solow economic growth model also proved that if the external human capital breaks through the threshold, it can make developing countries get rid of the poverty trap. Therefore, the economic development brought about by health care expenditure must benefit the poor in Sub-Saharan Africa and allow them to enjoy the welfare of social security.

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Section: Literature Reviewmentioning

confidence: 99%

Can Health Human Capital Help the Sub-Saharan Africa Out of the Poverty Trap? An ARDL Model Approach

Wang

Hua

Tao

et al. 2021

Front. Public Health

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“…Their model suggests that inequality impacts growth positively below a certain threshold of the human to physical capital ratio, beyond which the effect is negative. Bhatti, Haque and Osborn (2015) and Çepni, Gupta and Lv (2020) test and validate Galor and Moav's model. Chen (2003) intuitively postulates an inverted U-shaped relationship between initial income distribution and long-term economic growth, and an estimation and test of this relationship using cross-country data confirms the proposition which is also reminiscent of Kuznets's (1966) inverted U-shaped curve.…”

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confidence: 99%

Income inequality and economic growth: A re‐examination of theory and evidence

Balcılar

Gupta

et al. 2021

Review Development Economics

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We re-examine the theoretical and empirical relationship between income inequality and economic growth in an endogenous growth model with a flat tax on income, distributive conflicts among agents and median voter dynamics. We show that when government spends tax revenue on the provision of public goods in the form of both production and consumption services, the theoretical relationship between inequality and economic growth is neither strictly positive nor strictly negative but that it is ambiguous. An empirical evaluation of the theoretical findings is done by applying a semi-parametric model on a sample of 55 low-income, lower-middle-income, upper-middle-income and high-income countries for the period 1980 to 2010. Results show that the relationship between income inequality and growth takes the form of an inverted-U shape in that income inequality initially has a positive impact on growth up to an average Gini coefficient threshold of 35.92 beyond which it negatively impacts on growth.

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Economic disasters and inequality: a note

Ćorić

Gupta

2023

Econ Change Restruct

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This paper analyzes the dynamic effects of economic disasters, captured by cumulative decline in output of at least 10% over 1 or more years, on disposable income inequality of a sample of 99 countries over the annual period of 1960–2017. Based on impulse response functions derived from a robust local projections method, we find that economic disasters increase inequality by 4%, with the overall effect being statistically significant and highly persistent over a period of 20 years following the shock. When we repeat the analysis by categorizing the 99 countries based on income groups and regions, we find that the strongest effects are felt by high-income countries (8%), and in Europe, Central Asia and North America (16%) taken together, as primarily driven by ex-socialist economies. Though of lesser magnitude, statistically significant increases in inequality are also observed for low-, and upper-middle-income economies, and the regions of Latin America and Caribbean, Middle East and North Africa (MENA) and South Asia, and to some extent also for Sub-Saharan Africa. Our findings have important policy implications. Our findings suggest that the avoidance of economic crises is of paramount importance to ensure the sustainability of the welfare state, which in turn would allow for sound redistributive policies to reduce inequality, which can also help in indirectly reducing the negative impact of rare disasters on asset markets. In other words, our results have both economic and financial implications.

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Threshold effects of inequality on economic growth in the US states: the role of human capital to physical capital ratio

Cited by 5 publications

References 22 publications

Can Health Human Capital Help the Sub-Saharan Africa Out of the Poverty Trap? An ARDL Model Approach

Can Health Human Capital Help the Sub-Saharan Africa Out of the Poverty Trap? An ARDL Model Approach

Income inequality and economic growth: A re‐examination of theory and evidence

Economic disasters and inequality: a note

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