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South Africa is one of the wealthiest countries on the African continent. The high national level (and growth) of GDP per capita, however, masks significant differences in economic performance across South Africa's regions. This paper uses (spatial) Markov chain techniques to describe the evolution of the entire cross-section regional income distribution in terms of its intra-distributional characteristics during the post-Apartheid period. The results indicate a heavily diverging regional income distribution. Relatively poor regions are likely to remain poor or become even poorer and the richest regions will maintain their lead in terms of income levels. Explicitly taking account of space furthermore shows that these high-income regions are acting as local growth poles, absorbing economic activity from their immediate surroundings. Location, trade, education, and the variable fortune of the gold mining industry seem to be important determinants of the observed evolution. [ABSTRACT FROM AUTHOR]

ABSTRACT This paper empirically examines whether human capital defines the association between foreign direct investment (FDI) and income inequality. Rather than focusing on one country or region, we investigate with a broad cross section of countries to address parameter heterogeneity across countries. Using the instrumental variable threshold regressions approach, we find a significant threshold level of human capital, below which FDI exerts a disproportionately positive (negative) impact on the relatively poor (rich) and hence improves income distribution. Beyond this critical level, however, FDI benefits (harms) the nonpoor (nonrich) most and thus exacerbates income inequality. [ABSTRACT FROM AUTHOR]

ABSTRACT This paper first investigates a relationship between economic growth and income inequality using U.S. states data, a state cost-of-living deflator, and nonlinearity. It then explores the distribution of income gains among different income groups. We find that the impact of inequality on growth is nonlinear. Lowering inequality or increasing it substantially reduces growth; thus stable inequality may be good for growth. Economic growth affects incomes of the poor, the middle-income group, and the rich similarly with the elasticity of one. Education and labor market policies become important in promoting growth and improving income gains of the poor. [ABSTRACT FROM AUTHOR]

It is common in empirical regional economics to use total employment as an explanatory variable while investigating issues such as the level and distribution of income and migration. This paper argues that sector-specific changes in employment and labor market performance can have different effects on economic growth, the collection of tax revenue, migration, and the level and distribution of household income. As such, it is important to model sectors separately. We find that expansions in employment opportunities for a high-wage sector such as computer manufacturing or bioengineering, a medium-wage sector manufacturing, and the lower-wage sector of retailing have differing economic consequences for a small city. We use a data intensive computable general equilibrium model to obtain these results. [ABSTRACT FROM AUTHOR]

This note examines the correlation between income inequality and economic growth using a panel of income distribution data for 3,109 counties of the U.S. Using the System General-ized Method of Moments (GMM) approach, we find that for the entire sample of 3,109 counties, an increase in a county's level of inequality has a significant negative relationship with future economic growth. In reality, however, the magnitude, sign, and significance of this relationship is not necessarily uniform across all regions of the U.S., motivating the need to examine regional differentials in the relationship between inequality and growth. Consequently, we split our dataset into metropolitan and nonmetropolitan counties, into the eight Bureau of Economic Analysis regions, and into regions of different political affiliation and economic-dependence typology. Our results show considerable hetero-geneity in the relationship between inequality and growth across these regions. [ABSTRACT FROM AUTHOR]

Numerous models propose an income-distribution/growth linkage, but the empirical evidence is ambiguous and depends on the regression approach. Mixed findings are not unexpected if there are differing short- and long-term responses. Approaches utilizing cross-sectional variation primarily reflect long-run effects, whereas those using time-series variation primarily reveal short-run effects. This study reconciles these issues using U.S. state data. After allowing for short- and long-run responses and for separate effects between the tails and middle of the distribution, the consistent pattern is the middle-class share and overall inequality are positively related to long-run growth. However, the short-run income-distribution response is less clear. [ABSTRACT FROM AUTHOR]