The test of the relationship between income inequality and economic growth—Based on the ARDL model

Abstract

In the report of the 20th National Congress of the Communist Party of China, it was pointed out that promoting common prosperity in a solid way is the essential requirement of socialism. This paper uses the balance panel data of the post-tax Gini coefficient, per capita economic growth GDP and per capita economic growth rate of 18 countries from 1971 to 2018. By constructing the ARDL model to verify, it is concluded that the impact of income inequality on economic growth presents an "inverted U" relationship. The data set in this paper includes the sample of China, so the research conclusion of this paper is also applicable to China, and has important theoretical guidance significance for China to promote common prosperity scientifically and balance the relationship between income distribution and economic growth.