nep-pbe New Economics Papers
on Public Economics
Issue of 2012‒12‒22
fifteen papers chosen by
Keunjae Lee
Pusan National University

  1. Is the Burden Too Small? – Effective Tax Rates in Ghana By David Nguyen-Thanh; Christoph Strupat
  2. Political competition and the (in)effectiveness of redistribution in a federation By Ikuho Kochi & Raúl Alberto Ponce Rodríguez
  3. Should tax policy favor high- or low-productivity firms? By Langenmayr, Dominika; Haufler, Andreas; Bauer, Christian J.
  4. GINI DP 28: The impact of indirect taxes and imputed rent on inequality: A comparison with cash transfers and direct taxes in five EU countries By Francesco Figari; Paulus, A. (Alari)
  5. Modelling the Tax Burden on Labour Income in Brazil, China, India, Indonesia and South Africa By Luca Gandullia; Nicola Iacobone; Alastair Thomas
  6. Improving the Tax System in Indonesia By Jens Arnold
  7. Tax Evasion, Inequality and Progressive Taxes: A Political Economy Perspective By Radhika Lahiri; Mark Phoon
  8. Tax incentives and direct support for R&D: What do firms use and why? By Isabel Busom Piquer; Beatriz Corchuelo; Ester Martinez Ros
  9. The effects of countercyclical fiscal policy: Firm-level evidence from temporary consumption tax cuts in Turkey By Misch, Florian; Seymen, Atılım
  10. A Theory of Optimal Inheritance Taxation By Piketty, Thomas; Saez, Emmanuel
  11. Unleashing Business Innovation in Canada By Alexandra Bibbee
  12. GINI DP 49: The Fiscalization of Child Benefits in OECD Countries By Ferrarini, T. (Tommy); Nelson, K. (Kenneth); Höög, H. (Helena)
  13. Working Paper 160 - Infrastructure Investment and Economic Growth in South Africa a Granger Causality Analysis By Kumo Wolassa L.
  14. Does corporate taxation affect cross-country firm leverage? By Antonio De Socio; Valentina Nigro
  15. A Meta-Analytic Assessment of the Effects of Inequality on Growth By Pedro Neves; Sandra Silva; Óscar Afonso

  1. By: David Nguyen-Thanh; Christoph Strupat
    Abstract: This paper examines capital income taxation in Ghana. We calculate effective marginal tax rates (EMTR) and effective average tax rates (EATR) using an extended Devereux-Griffith methodology to accommodate for tax incentives - an exercise that has not been done so far for Ghana. We find that the wide range of tax incentives leads to a high variation of effective average tax rates in Ghana. Tax holidays and preferential income tax rates lower the effective tax burden to a significant extent and encourage individual tax avoidance strategies. Furthermore our results confirm previous findings that tax holidays, effectively reducing EATR, favor high-profit short-lived investment projects raising doubts about their rationale.
    Keywords: Effective tax rates; tax holidays; Ghana
    JEL: H23 H25 H10
    Date: 2012–12
  2. By: Ikuho Kochi & Raúl Alberto Ponce Rodríguez (Universidad Autónoma de Ciudad Juárez)
    Abstract: We analyze political and economic conditions in which the effectiveness of public redistribution might be low in a federation. In our economy, the central government redistributes income while local governments provide a pro poor local public good. If local public spending falls as a response to the ex-post tax-transfer distribution of income engineered by the policy of the central government then public redistribution might be ineffective in redistributing welfare. In this paper we address this issue. Our main findings are: first, if the party of some local government represents a coalition of voters with labor earning abilities below the average earning ability of the economy and the aggregate net transfer from the redistributive program is negative for residents in the locality then local public spending falls in this district as a response to the redistributive policy of the central government. Second, if local governments of all districts are controlled by parties representing voters with sufficiently high marginal utilities of income and labor earning abilities below the nationwide average labor earning ability then public redistribution induces all local governments to reduce local public spending.
    Keywords: Redistributive effects, state and local governments, fiscal policy and behavior of agents, elections
    JEL: H23 H76 H3 D72
    Date: 2012–07–01
  3. By: Langenmayr, Dominika; Haufler, Andreas; Bauer, Christian J.
    Abstract: Heterogeneous firm productivity seems to provide an argument for governments to pursue 'pick-the-winner' strategies by subsidizing highly productive firms more, or taxing them less, than their less productive counterparts. We appraise this argument by studying the optimal choice of effective tax rates in an oligopolistic industry with heterogeneous firms. We show that the optimal structure of tax differentiation depends critically on the feasible level of corporate profit taxes, which in turn depends on the degree of international tax competition. When tax competition is moderate and profit taxes are high, favoring high-productivity firms is indeed the optimal policy. When tax competition is aggressive and profit taxes are low, however, the optimal tax policy is reversed and low-productivity firms are tax-favored.
    Keywords: business taxation; firm heterogeneity; tax competition
    JEL: H25 H87 F15
    Date: 2012–12
  4. By: Francesco Figari (University of Insubria); Paulus, A. (Alari)
    Abstract: This paper examines the redistributive impact of imputed rent (private and public) and indirect taxes (value added tax and excises), comparing this with the effects of cash transfers and direct taxes in five EU countries. The extended income concept, taking into account both imputed rent and indirect taxes, provides a more reliable picture of inequality differences across countries. Our results show that indirect taxes have a regressive effect with respect to income in all countries considered but always smaller in magnitude than other tax-benefit instruments. Imputed rent reduces overall inequality in particular where the prevalence of individuals living in own accommodation is high even among the poorest (Greece) and where the contribution of the public imputed rent is large (the UK).
    Keywords: Imputed rent, indirect taxes, European Union, household income, microsimulation, EUROMOD. JEL: C81, H23, D63
    Date: 2012–01
  5. By: Luca Gandullia; Nicola Iacobone; Alastair Thomas
    Abstract: This paper examines the taxation of labour income in five key emerging economies: Brazil, China, India, Indonesia and South Africa (the “BIICS” countries). The paper highlights the key features of the taxation of labour income in these countries, and then uses this information to model the tax burdens on labour income in each country following the OECD's Taxing Wages methodology. Average and marginal tax wedges in Brazil and China (Shanghai) are found to be similar in size in 2010 to those of many OECD countries. In contrast, India, Indonesia and South Africa (as well as rural China) impose very low average and marginal tax wedges compared to the vast majority of OECD countries. These relatively low tax wedge results are not altogether surprising given that these countries also currently have lower tax-to-GDP ratios than the OECD average. However, the results suggest that, in the long-term, reforms will be necessary in most of the BIICS countries if the labour income base is to significantly contribute to funding the substantial increases in public expenditure, particularly on infrastructure and social insurance, that will inevitably come as these countries continue to grow.<P>Modéliser la charge fiscale pesant sur les revenus du travail en Afrique du Sud, au Brésil, en Chine, en Inde et en Indonésie<BR>Ce document propose un examen de la taxation des revenus du travail dans cinq grandes économies émergentes, à savoir l’Afrique du Sud, le Brésil, la Chine, l’Inde et l’Indonésie. Il met l’accent sur les principales caractéristiques des régimes d’imposition en vigueur dans ces pays, les informations correspondantes étant ensuite utilisées pour modéliser la charge fiscale pesant sur les revenus du travail dans chaque pays à l’aide de la même méthodologie que celle suivie par l’OCDE pour sa publication intitulée Les impôts sur les salaires. Il apparaît qu’au Brésil et en Chine (Shanghai), les coins fiscaux moyens et marginaux sont du même ordre que ceux d’un grand nombre de pays de l’OCDE en 2010. En Afrique du Sud, en Inde et en Indonésie (ainsi qu’en Chine rurale) en revanche, les coins fiscaux moyens et marginaux sont très faibles en comparaison de ceux de la grande majorité des pays de l’OCDE. Le niveau relativement bas de ces chiffres n’est pas vraiment surprenant étant donné que ces pays affichent actuellement des rapports impôt/PIB inférieurs à la moyenne de l’OCDE. Il donne cependant à penser que, sur le long terme, des réformes seront nécessaires dans la plupart de ces économies si la taxation des revenus du travail doit apporter une contribution notable au financement des hausses considérables des dépenses publiques, en particulier dans les domaines des infrastructures et de la sécurité sociale, qu’elles devront inévitablement assumer à mesure qu’elles continueront à croître.
    Keywords: personal income tax, tax wedge, social security contributions, labour income, coin fiscal, cotisations de sécurité sociale, revenus du travail, impôt sur le revenu des personnes physiques
    JEL: H24 H55
    Date: 2012–12–12
  6. By: Jens Arnold
    Abstract: Indonesia has come a long way in improving its tax system over the last decade, both in terms of revenues raised and administrative efficiency. Nonetheless, the tax take is still low, given the need for more spending on infrastructure and social protection. With the exception of the natural resources sector, increasing tax revenues would be best achieved through broadening tax bases and improving tax administration, rather than changes in the tax schedule that seems broadly in line with international practice. Possible measures to broaden the tax base include bringing more of the self-employed into the tax system, subjecting employer-provided fringe benefits and allowances to personal income taxation and reducing the exemptions from value-added taxes. Similarly, broad-based investment credits would be a less distortive way to enhance investment incentives than selective tax holidays. Introducing a targeted, simplified tax regime for small and medium-sized enterprises, as currently planned by the government, could foster their integration into the tax system in the longer run, even if its short-run revenue potential is limited. Upgrading tax administration has made substantial progress in Indonesia since 2002, although there is still scope to improve the training of tax officers and the administration’s audit and litigation capacities, while strengthening internal control systems and enhancing the transparency of administrative decisions. The audit system could be further improved by allocating more tax audits on the basis of compliance risks. In the natural resources sector, particularly in mining, there is a case for increasing the government’s share of resource rents through higher tax rates imposed on these rents, as opposed to taxing revenues. This would imply a willingness of the government to bear a larger share of the exploration and development risk than heretofore, which Indonesia, with its improved access to international financial markets and a diversified resource portfolio, is now well placed to do. In the mining sector, a powerful rent tax regime with a large government take would serve the country better than export taxes and ownership restrictions that have been decided recently. This Working Paper relates to the 2012 OECD Economic Review of Indonesia (<P>Améliorer le système fiscal en Indonésie<BR>L’Indonésie a beaucoup amélioré son système fiscal au cours de la dernière décennie, tant en ce qui concerne le montant des recettes collectées que l’efficience administrative. Néanmoins, les recettes fiscales restent faibles au regard de la nécessité d’accroître les dépenses consacrées aux infrastructures et à la protection sociale. À l’exception du secteur des ressources naturelles, l’augmentation des recettes fiscales doit passer avant tout par l’élargissement de l’assiette et l’amélioration de l’administration fiscale, plutôt que par une révision du barème d’imposition qui semble globalement conforme à la pratique internationale. Parmi les mesures possibles pour élargir l’assiette figurent l’intégration des travailleurs non salariés dans le système fiscal, l’assujettissement à l’impôt sur le revenu des personnes physiques des biens en nature et des indemnités versés par l’employeur, et la réduction des exemptions à la TVA. Dans le même ordre d’idées, l’introduction de crédits d’impôt généreux en faveur de l’investissement serait un moyen de stimuler l’investissement qui induirait moins de distorsions que des exonérations fiscales sélectives. La mise en place d’un régime simplifié et ciblé pour les petites et moyennes entreprises, actuellement envisagé par les pouvoirs publics, pourrait favoriser leur intégration dans le système fiscal à plus long terme, même si l’effet à court terme sur les recettes est limité. La modernisation de l’administration fiscale a beaucoup progressé en Indonésie depuis 2002, bien qu’il soit encore possible d’améliorer la formation des agents des impôts et de renforcer les capacités de l’administration à mener des vérifications et à agir en justice, tout en consolidant les systèmes de contrôle interne et en accroissant la transparence des décisions administratives. Le système de vérification pourrait être perfectionné en fondant les décisions de contrôle fiscal sur les risques de non paiement. Dans le secteur des ressources naturelles, et notamment les industries extractives, il y a lieu d’accroître la part des rentes de ressources revenant à l’État en relevant les taux d’imposition de ces rentes, au lieu de taxer les recettes. Une telle mesure impliquerait la volonté des pouvoirs publics de prendre à leur charge une partie des risques d’exploration et de mise en valeur plus importante qu’auparavant, ce qui est tout à fait à la portée de l’Indonésie, qui bénéficie aujourd’hui d’un meilleur accès aux marchés internationaux de capitaux et d’un portefeuille de ressources diversifié. Dans le secteur minier, un régime performant d’imposition des rentes, qui permette à l’État de percevoir une fraction élevée des recettes, servirait davantage les intérêts du pays que les taxes à l’exportation et les restrictions à la propriété qui ont été décidées récemment. Ce Document de travail se rapporte à l’Étude économique de l’OCDE de l’Indonésie 2012 (
    Keywords: industrial policy, tax administration, Indonesia, export taxes, tax exemptions, tax systems, natural resource taxation, politique industrielle, ressources naturelles, administration fiscale, Indonésie, exonération fiscale, système fiscal, taxes à l’exportation
    JEL: F13 H21 H23 H24 H25 H26 H27 L78 O17 O23 O24 O25
    Date: 2012–10–30
  7. By: Radhika Lahiri (QUT); Mark Phoon
    Abstract: This paper revisits the original Allingham and Sandmo (1972) framework with a view towards addressing the issue of tax compliance, and examining the political economy implications of tax evasion for progressivity in the tax structure. In so doing, we ‘start from scratch’ by constructing a simple extension of the basic Allingham and Sandmo construct that allows agents to initially decide whether to evade taxes or not. We then use a step-by-step model building procedure by taking both the basic model and its ‘evade-or-not’ counterpart towards a dynamic macroeconomic framework. We find that the ‘evade or not’ assumption has strikingly different and more realistic implications for the extent of evasion, and demonstrate that it is a more appropriate modeling strategy in the context of macroeconomic models. Furthermore, our numerical analysis suggests that the political outcome for the tax rate for a given level of inequality is conditional on whether there is a large or small or large extent of evasion in the economy, although changes in inequality do not matter for this outcome.
    Keywords: Tax Evasion; Inequality; Political Economy
    JEL: H26 D63 E60
    Date: 2012–12–10
  8. By: Isabel Busom Piquer (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona); Beatriz Corchuelo (Deparment of Economy, University of Extremadura); Ester Martinez Ros (Departamento de Economía de la Empresa, Universidad Carlos III de Madrid and UNU-MERIT)
    Abstract: This paper studies whether firms’ use of R&D subsidies and R&D tax incentives is correlated to two sources of underinvestment in R&D, financing constraints and appropriability. We find that financially constrained SMEs are less likely to use R&D tax credits and more likely to obtain subsidies. SMEs using legal methods to protect their intellectual property are more likely to use tax incentives. Results are ambiguous for large firms. For both having previous experience in R&D increases the likelihood of using tax incentives, while it reduces the likelihood of using exclusively subsidies, suggesting that the latter induce entry into R&D. Results imply that direct funding and tax credits do not have the same ability to address each source of R&D underinvestment, and that on average subsidies may be better suited than tax credits at least for SMEs. From a policy perspective these tools may be complements rather than substitutes.
    Keywords: R&D, tax incentives, subsidies, policy mix
    JEL: H25 L60 O31
    Date: 2012–12
  9. By: Misch, Florian; Seymen, Atılım
    Abstract: The paper investigates the effects of temporary consumption tax cuts using firm-level data. As part of its countercyclical measures implemented during the recent global economic crisis, Turkey temporarily lowered consumption taxes on selected durables. Using data on the change of sales of firms that benefited from this measure and of those that did not over different periods, we perform a difference-in-difference analysis where we also control for various unobservable effects including sector-specific shocks to address potential endogeneity. We find positive and robust effects of consumption tax cuts on the change of firm sales which is consistent with theoretical predictions. --
    Keywords: countercyclical fiscal policy,consumption tax cuts,firm-level data
    JEL: E32 E62 H20
    Date: 2012
  10. By: Piketty, Thomas; Saez, Emmanuel
    Abstract: This paper derives optimal inheritance tax formulas that (a) capture the key equity-efficiency trade-off, (b) are expressed in terms of estimable sucient statistics, (c) are robust to the underlying structure of preferences. We consider dynamic stochastic models with general and heterogeneous bequest tastes and labor productivities. We limit ourselves to simple but realistic linear or two-bracket tax structures to obtain tractable formulas. We show that long-run optimal inheritance tax rates can always be expressed in terms of distributional parameters, aggregate behavioral elasticities and social preferences for redistribution. Importantly, those results carry over with tractable modifications to (a)the case with social discounting (instead of steady-state welfare maximization), (b) the case with partly accidental bequests, (c) the standard Barro-Becker dynastic model. In all cases, the optimal inheritance tax rate increases with the concentration of bequest received and decreases with the elasticity of aggregate bequests to the net-of-tax rate. The optimal tax rate is positive and quantitatively large if concentration is high, the elasticity is low and society cares mostly about those receiving little inheritance. In contrast, the optimal tax rate is negative when society cares mostly about inheritors. We propose a calibration using micro-data for France and the United States. We find that for realistic parameters the optimal inheritance tax rate might be as large as 50%-60% - or even higher for top bequests, in line with historical experience.
    Keywords: Inheritance; Optimal taxation; Wealth
    JEL: H10
    Date: 2012–12
  11. By: Alexandra Bibbee
    Abstract: This paper discusses how to improve Canada’s business innovation in order to boost labour productivity and output growth. Many general framework conditions are highly favourable to business risk-taking and innovation, including macro stability, openness, strong human capital, low corporate tax rates, low barriers to firm entry and flexible labour markets. However, they can be improved further by reduced external and interprovincial barriers in network and professional service sectors, more efficient capital markets, fewer capital tax distortions and improved patent protection. A second focus should be on ensuring that incentives arising from government subsidies are targeted on actual market failures. The very high level of support to business R&D via the federal Scientific Research and Experimental Development (SR&ED) tax credit and provincial top-ups may affect the incentives of small firms to grow and should be redesigned. A plethora of small, fragmented granting programmes, mainly geared to SMEs, should be streamlined for better government-business collaboration. The large public share in venture capital should be wound down, as it may crowd out more productive private finance. A final focus should be on boosting manager and worker skills that are intrinsic to all forms of innovation, by filling gaps in training, mentoring and education. This Working Paper relates to the 2012 OECD Economic Review of Canada (<P>Libérer l'innovation des entreprises au Canada<BR>Cette étude se penche sur la manière de renforcer l’innovation dans les entreprises canadiennes afin de stimuler la productivité de la main-d’oeuvre et la croissance de la production. De nombreuses conditions-cadres canadiennes sont très propices à la prise de risques et à l’innovation dans les entreprises : stabilité macroéconomique, ouverture sur l’extérieur, solidité du capital humain, faible imposition des bénéfices des sociétés, rareté des obstacles à l’entrée des entreprises sur le marché, flexibilité des marchés du travail. Ces conditions-cadres peuvent toutefois s’améliorer encore grâce à une diminution des barrières extérieures et interprovinciales dans les secteurs des réseaux et des services professionnels, à une plus grande efficience des marchés financiers, à de moindres distorsions de l’imposition du capital et à une meilleure protection des brevets. Un deuxième axe pourrait consister à s’assurer que les incitations découlant des subventions de la puissance publique ciblent bien les carences effectives du marché. Il se peut que le très fort soutien à la R-D des entreprises représenté par le crédit d’impôt fédéral pour la RS&DE (recherche scientifique et développement expérimental) et par ses compléments provinciaux entame le désir de croissance des petites entreprises ; peut-être donc faudrait-il redessiner ces aides. La kyrielle de petits programmes fragmentaires de subventionnement visant principalement les PME devrait être rationalisée pour améliorer la coopération entre le milieu universitaire et le monde de l’entreprise. Il faudrait réduire la trop grande place des fonds publics dans le capital-risque, car il se peut qu’elle évince des financements privés plus productifs. Un dernier axe devrait, par des actions cherchant à combler les lacunes de formation, de tutorat et d’enseignement, privilégier la stimulation des compétences de l’encadrement et du personnel qui s’appliquent à toutes les formes d’innovation. Ce Document de travail se rapporte à l’Étude économique de l’OCDE du Canada 2012 (
    Keywords: productivity, venture capital, competition, innovation, vouchers, subsidies, research and development, business taxes, intellectual property rights, multifactor productivity, entrepreneurship, patents, technology transfer, intangibles, angel investing, R&D tax credits, academic research grants, productivité, capital-risque, innovation, concurrence, subvention, productivité multifactorielle, entrepreneuriat, brevets, transfert de technologie, impôt sur les sociétés, recherche et développement, biens immatériels, tutorat-investissement, crédits d’impôt pour la R-D, subventions pour la recherche universitaire, bons, droits de propriété intellectuelle
    JEL: H25 I23 O31 O32 O34 O38
    Date: 2012–10–29
  12. By: Ferrarini, T. (Tommy); Nelson, K. (Kenneth); Höög, H. (Helena)
    Abstract: Welfare states have been subject to a subtle and a sometimes unrecognized transformation: the fiscalization of social benefits. This change of national policy is notable in the area of family policy, where various forms of child tax benefits have been introduced. The composition and level of child benefits varies therefore not only across countries, but also over historical time (Kamerman and Kahn, 1981; MacNicol, 1992; Wennemo, 1994; Gauthier, 1996). In the immediate Post-War period many countries either complemented or replaced various types of income-tested child benefits with universal ones, introducing a shift in the distributive profile of the system. However, far from all welfare states relied only on the principle of universalism in the design of child benefits. Child tax benefits and fiscal policy has often been used as an alternative or complement to social policy legislation. During the era of welfare state stagnation and decline since the mid-1970s some countries have relocated parts of the child benefit package from social policy to the income tax system. During this process of fiscalization, elements of income-testing have once again been introduced to child benefits, thus, adding stronger elements of vertical redistribution between socio-economic groups. The change of scenery involves not only a shift in the relative emphasis of social and fiscal policies in the redistributive budgets of the European countries, but also a greater degree of selectivity and low-income targeting is introduced to the provision of child benefits. ...
    Date: 2012–07
  13. By: Kumo Wolassa L. (African Development Bank)
    Abstract: This paper conducted pairwise Granger causality tests between economic growth, economic infrastructure investment, and employment in South Africa for the period 1960-2009 using bivariate vector autoregression (VAR) model with and without a structural break. The result indicates that there is a strong causality between economic infrastructure investment and GDP growth that runs in both directions implying that economic infrastructure investment drives the long term economic growth in South Africa while improved growth feeds back into more public infrastructure investments. We also found a strong two way causal relationship between economic infrastructure investment and public sector employment reflecting the role of such investments on job creation through construction, maintenance and the actual operational activities, while increased employment could in turn contribute to further infrastructure investments indirectly through higher aggregate demand and economic growth. Further, there is a strong unidirectional causal link between economic growth and public sector employment that runs from the former to the latter; and a strong one way causal link between private sector employment and economic growth that runs from the former to the latter. Economic growth appears to be one of the main drivers of public sector jobs but not the private sector ones and that while the private sector employment remains one of the key drivers of growth, the latter does not seem to have translated into more jobs, reflecting the much criticized scenario of jobless growth in the economy. The pairwise causality test results were assessed further using autoregressive distributed lag (ARDL) or bounds testing approach for cointegration to assess both the short-and long-run relationships among the variables in question. The bounds test results indicate the presence of steady-state long-run equilibrium relationship between economic growth, economic infrastructure investment, formal employment, and exports and imports of goods and services providing a theoretical foundation for the empirical results of the pairwise Granger causality tests.
    Date: 2012–12–10
  14. By: Antonio De Socio (Bank of Italy); Valentina Nigro (Bank of Italy)
    Abstract: We evaluate the relation between firm leverage and taxation of corporate income using a dataset of mostly unlisted European corporations, highly representative of medium-sized and large firms. We use a correlated random effect approach in order to take into account unobserved heterogeneity and to assess the contribution of cross-sectional variation of the regressors. We also apply quantile regressions to evaluate a possible differential impact of taxation on leverage across firms. Our results suggest that corporate income taxation is positively related to leverage and explains part of the cross-country variability, showing a stronger effect for less levered firms. In accordance with the theory of the debt tax shield, the relation between debt and taxation is stronger for highly profitable firms. These findings are robust to the inclusion of different measures of the financial development and characteristics of the legal system of the country where firms are located.
    Keywords: leverage, corporate taxation, financial structure
    JEL: G32 H32
    Date: 2012–11
  15. By: Pedro Neves (CEF.UP and FEP, Universidade do Porto); Sandra Silva (CEF.UP and FEP, Universidade do Porto); Óscar Afonso (CEF.UP, OBEGEF, NIFIP, and FEP, Universidade do Porto)
    Abstract: Over the last two decades there has been a growing interest in determining the impact of inequality on growth. The empirical literature has, however, produced controversial results regarding both the signal and the magnitude of such impact. This paper develops a meta-analysis on this literature on an attempt to systematize and explain the diversity in studies' results. We find that most of the heterogeneity is due to differences in studies' methodological characteristics, such as the structure of the data, the sample coverage, the type of distribution, the definition of income, and the estimation technique. These results suggest that there is not one but several underlying effects of inequality on growth, which are likely to differ in their nature and operate in opposing directions. We also find traces of publication bias, as, on the one hand, authors and journals are more willing to report and publish statistically significant results, and, on the other hand, studies' results tend to follow a predictable cycle of fashion and novelty over time.
    Keywords: meta-analysis; inequality; economic growth; publication bias.
    JEL: O4 D3 H2 C21
    Date: 2012–12

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