What keeps inclusive growth going? An episodic approach

Jakub Bartak (Universidad de Economía de Cracovia)

The paper investigates the driving forces of inclusive growth. In searching for factors of inclusive growth we incorporate an episodic approach in regards to capture structural changes associated with growth and income distribution. Specifically, we detect structural breaks in both income inequality and economic growth time series to identify growth-inequality episodes. Next, we classify these episodes into one of the following pattern: inclusive growth, exclusive growth, inclusive stagnation and exclusive stagnation. Furthermore, we study correlates of so obtained patterns with a multinomial regression model. Our results show that the distribution of inequality-growth patterns were significantly changing in the investigated period. We also show, that price stability, and human and physical capital accumulation enhance likelihood of following an episode of inclusive growth.