New ways of looking at old issues: inequality and growth

The paper uses new cross-country data on income and asset (land) distributi on to show that (i) there is a strong negative relationship between initial inequality in the asset distribution and long-term growth; (ii) inequality reduces income growth for the poor, but not for the rich; and (iii) availa ble longitudinal data provide little support for the Kuznets hypothesis. Po licies that increase aggregate investment and facilitate acquisition of ass ets by the poor might thus be doubly beneficial for growth and poverty redu ction. (C) 1998 Elsevier Science B.V. All lights reserved. JEL classificati on: O1; I3; E6; N1.