Graduate Program
Economics
Degree Name
Master of Arts (MA)
Semester of Degree Completion
2012
Thesis Director
Mukti Upadhyay
Thesis Committee Member
Dan Hickman
Thesis Committee Member
Ali Moshtagh
Abstract
The relationship among growth, poverty and inequality has been and remains one of the most controversial topics in development economics. Development literature suggests that they are likely to evolve in an interrelated fashion in most countries although their exact path will depend on country circumstances.
The primary objective is to explore relationships among growth, poverty and inequality. The investigation largely follows the approach taken by Lundberg and Squire (2003) who however, examine evolution of only growth and inequality. Suitable modifications to their model are made to achieve a greater understanding of the evolutionary process of the three major variables of interest.
The first section analyzes three equations in the context of a base model where growth, poverty and inequality are independently determined. A sample of low and middle income countries is used to estimate the models based on three year averages from 1980 through 2009. The models consist of some common list of variables and some control variables that are uniquely relevant to specific equations. The second section explores three equations in the context of a simultaneous equations model that relaxes the independence assumption of growth, poverty and inequality. Thus, the equation for each of the three variables now includes the other two. The results indicate that growth, poverty and inequality do tend to evolve simultaneously in developing countries.
Finally, growth and inequality elasticities of poverty are estimated. The results show that poverty has a significant negative elasticity with respect to growth and a significant positive elasticity with respect to inequality. The elasticities indicate that poverty is more responsive to changes in inequality than to changes in growth.
Recommended Citation
Gezahegn, Mahlet Getachew, "Relationships Among Growth, Poverty And Inequality In Developing Countries" (2012). Masters Theses. 1022.
https://thekeep.eiu.edu/theses/1022
