A Reassessment of the Relationship Between Income Inequality and Poverty‪.‬

ABSTRACT The paper challenges the belief that income inequality causes poverty. The state data set instead of international database is used to investigate whether or not a rise in income equality causes an increase or decrease in poverty rate. The methodology suggested by Learner (1983) and Levine et al (1991) is used to test the robustness of income inequality coefficient estimates by specifying and altering a set of other conditioning variables which explain poverty. The study finds support for the hypothesis that income inequality may cause economic growth and hence reduce poverty.