Income Inequality: Do Different Inequality Measures Show Different Impacts on Economic Growth, at the State Level? An Analysis of the State of New Jersey

Authors

  • Bertram Chukwudum Ifeanyi Okpokwasili Georgian Court University

DOI:

https://doi.org/10.18533/ijbsr.v5i12.912

Keywords:

Economic growth, gini coefficients, quintiles, real GDP/capita.

Abstract

This paper investigates whether the use of different inequality measures is instrumental in determining impact on economic growth at the State level. We find that different measures show different levels of significance with respect to economic health. We study New Jersey income distribution and shares from 1964 to 2014, using graphs and statistics. The dual analyses approach and the use of different inequality measures enabled conclusions to be reached, that only one view and one inequality measure would have made difficult, if not misleading. New Jersey Real GDP/Capita (RGC) was going up, whether or not the inequality measure was getting better. Inequality had little or no effect on the direction of the RGC. Economic Growth is not a good measure of the effects of inequality.

Author Biography

  • Bertram Chukwudum Ifeanyi Okpokwasili, Georgian Court University

    Associate Professor

    School of Business Administration

References

Auten, G., (2014), Historical perspectives on income inequality and economic mobility, Income Inequality in America:Fact or Fiction, Economic Policies for the 21st Century at the Manhattan Institute, E21, IssueB #1, pp 14 - 18

Awuku-Budu, C., Ledia G., Christopher A. L., and Carol A. R., (2013) A first look at experimental personal consumption expenditures by state, BEA Briefing, www.bea.gov/about/pdf/0613_experimental_pcs-by-state_statistics.pdf, (retrieved 08/06/15)

Barro, R., J. (2000). Inequality and growth in a panel of countries. Journal of Economic Growth 5(1): pp 5-32.

Benoit, K., (2011), Linear regression models with logarithmic transformations, Methodology Institute, London School of Economics. , http://www.kenbenoit.net/courses/ME104/logmodels2.pdf

Birdsall, N., (2007), Income distribution: effects on growth and development, center for global development, Working paper, Number 18, www.cgdev.org

Bishop, J. A. , Subhabrata Chakraborti and Paul D. Thistle, (1991), Relative deprivation and economic welfare: A statistical investigation with gini-based welfare indices, The Scandinavian Journal of Economics, Vol.93, No 3 , http:// www.jstor.org/stable/3440184, retrieved 10/05/2013

Blank, R. M., David C., Frank L. and James M., (1993), Poverty, income distribution and growth: are they still connected?, Brookings Papers on Economic Activity, Vol. 1993, No.2. pp.285-339

Bureau of Economic Analysis, (1963-1997) Gross domestic product (GDP) by state (millions of current dollars), http://bea.gov/regional/pdf/gsp/gdpstate.pdf

Bureau of Economic Analysis GDP by State Estimation Methodology, BEA GDP by State (2014), http://www.bea.gov/newsreleases/regional/gdp_state/gsp_newsrelease.htm

Bureau of Economic Analysis (2014), SA1-3 Personal income summary state or DC, New Jersey, 1929-2013.

Chang, R., (1994), Income inequality and economic growth: evidence and recent theories, Economic Review, Federal Reserve Bank of Atlanta, July – August 1994, pp 1-10

Deaton, A., (2001), Health, inequality, and economic development, National Bureau of Economic Research, Working Paper 8318, htttp://www.nber.org/papers/w8318

De Maio, Fernando G. (2007), Income inequality measures, Dept. of Sociology and Anthropology, J Epidemiol Community Health 2007;61:849-852 .

Frank, Mark W.(2008), A new state level panel of income inequality measures over the period 1916 – 2005 SHSU Economics & Int’L Business Working Paper no SHSU_Eco_WP08-02., Vol.31, pp 241-263, http://www.shsu.edu/eco_mwf/Inequality measures_final.pdf

Frank and Sommeiller (2014) Price Series- Annual top income share measures for each state, 1917-2012, www.shsu.edu/eco.msf/inequality.html

Harkinson, J., (2015), Bernie Sanders goes biblical on income inequality, http://www.motherjones.com/politics/2015/04/bernie-sanders-inequality-president-interview, Mother Jones Publications, (retrieved 08/06/15)

Herb, J., and Raimy S., (2013), Health and safety baseline topic report, Environmental Analysis and Communications Group, Edward J. Bloustein School of Planning and Public Policy, Rutgers University, revised August 2013.

IPUMS – Integrated Public Use Microdata, Minnesota Population Center, University of Minnesota , https:cps.ipums.org

Kuznets, S., (1955), Economic growth and income inequality, The American Economic Review, Vol.XLV, number one, pp 1-28.

Kuznets Curve from Wikipedia, http://en.wikipedia.org/wiki/Kuznets_curve, retrieved Feb.27, 2015

Lauter, D., (2015), Income inequality emerges as key issue in 2016 presidential campaign, Los Angeles Times,www.latimes.com/nation/la-na-campaign-income-20150205-story-htmlpage=1, Feb. 5, 2015

LSNJ – The Legal Services of New Jersey (2012 and 2014), Income inequality in New Jersey: a growing divide and its consequences, Annual Report from the Legal Services of New Jersey Poverty Research Institute, July 2012 and December 2014.

Odedokun, M.O. and Jeffery I. Round, (2004), Detrminants of Income Inequality and its Effects on Economic Growth: Evidence from African Countries, African Development Bank .

Okpokwasili, B. (2005). Economic growth vs. economic development, a case of Nigeria. In Proceedings of the Association of Global Business, Vol. 17, #55, Nov. 17-19, 2005.

Panek, S. D., Jacob R H., and Frank T. B. (2003), Comprehensive revision of gross domestic product by metropolitan areas- Advanced Statistics for 2003 and Revised Statistics for 2001-2002

Persson, T., and Guido T., (1994). Is inequality harmful for growth. American Economic Review 84(3): pp 600-621.

Piketty, T., and Emmanuel S., (2003), Income inequality in the United States 1913-1998, The Quarterly Journal of Economics, Vol.CXV111, Issue 1 February 2003. pp 1-39

Sen, A. (2001). Development as Freedom, Oxford University Press.

Simic, M., (2012) A critical reading of the spirit level: why equality is better for everyone. What is the scientific content of the book?, http://www.environnement.ens.fr/IMG/file/stages/A critical reading of the spirit level

Taylor, T., The Kuznets curve and inequality over the last 100 Years, Conversable Economist, http://conversableeconomist.blogspot.com/211/09/kuznets_curve_and-inequality-over-last.html. Retrieved 02/27/2015

The Manhattan Institute, (2014), E21 Economic Policies for the 21st Century, Income inequality in America- Fact and Fiction,Issue B #1

US Department of Commerce, (2012) Household Income Inequality Within US Counties: 2006-2010, United States Census Bureau.

Weil, David N. (2014) A review of Angus Deaton’s the great escape: health, wealth and the origins of inequality, Brown University and NBER, Journal of Economic Literature, 53(1): 102-14.

DOI: 10.1257/jel.53.1.102

Wilkinson, R and Paul, P.,(2014), What does inequality do to our bodies and minds, a psychologist and an epidemiologist discuss. IDEAS.TED.Com, retrieved 01-09-2016.

Downloads

Published

2016-01-15

Issue

Section

Article