Department of Economics, Delhi School of Economics
Online published on 11 July, 2017.
This paper examines the functional relationships between income inequality, economic factors, institutions, and Kuznets’ inverted-U hypothesis. A model that incorporates interactive as well as direct effects of several factors to capture their combined effect on inequality is developed. The model is estimated using the Gini coefficient using a cross-sectional data set for 25 Indian states in the years 1983, 1993 and 2000. The results do not support Kuznets’ hypothesis; however, the relationship between growth and inequality is conditioned by a host of economic and institutional factors.
