Income inequality in Arab countries

What is it about?

This paper aims to examine the relationship between income inequality and economic growth in the Arab countries by carrying out an empirical study that focuses mainly on analyzing whether or not the Kuznets’ curve represents the path of inequality in Arab countries.

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Why is it important?

To date and our knowledge, this is the first paper to be proposed for studying the Kuznets’ curve in the Arab world. This paper differs from the existing literature in the following aspects. First, it examines the Kuznets’ curve in the Arab world by focusing on how economic growth affects income inequality in the region, rather than growth’s effect on poverty as done in previous studies. Second, the analysis used in this study utilizes an interactive fixed effects model proposed by Bai (2009) whereas most of the existing literature used pooled, fixed, or random-effects models. Our results show that the Kuznets curve does not characterize economic development in the Arab region and that trade, urbanization and education positively impact income inequality.