Economic growth and income inequality

In recent years the problem of economic inequalities has become one of the most often discussed problems in economics. Even though from neoclassical perspective inequalities should not have negative impact on economy, still the relation between inequalities and economic growth is not obvious. Traditionally, the starting point in this discussion is Simon Kuznets concept, according to which inequality rises in the early phases of economic development and decreases as the growth takes place. The empirical verification of this concept has been investigated, but the evidence is ambiguous. In this context, re-examining Kuznets theory for socialist countries in Asian (i.e. China, Vietnam and Lao) is especially…