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Dalia Hakura, Mumtaz Hussain, Monique Newiak, Vimal Thakoor, and Fan Yang
INTERNATIONAL MONETARY FUND
A growing body of empirical evidence suggests that inequality-income or gender related-can
impede economic growth. Using dynamic panel regressions and new time series data, this paper
finds that both income and gender inequalities, including from legal gender-based restrictions, are
jointly negatively associated with per capita GDP growth. Examining the relationship for countries
at different stages of development, we find that this effect prevails mainly in lower income
countries. In particular, per capita income growth in sub-Saharan Africa could be higher by as much
as 0.9 percentage points on average if inequality was reduced to the levels observed in the fastgrowing
emerging Asian countries. High levels of income inequality in sub-Saharan Africa appear
partly driven by structural features. However, the paper's findings show that policies that influence
the opportunities of low-income households and women to participate in economic activities also
matter and, therefore, if well-designed and targeted, could play a role in alleviating inequalities.