Income inequality and Economic Development: evidences from Brazilian Municipalities

This note aimed to investigate, within Brazilian municipalities, the relationship between income inequality and economic development. We used data from 5,566 Brazilian municipalities, and parametric and nonparametric tools were used. The results obtained show that there is no inverted-U relationship between these two variables. Our best model (the nonparametric model) suggest an U-shape relationship between income inequality and economic development. This finding differs from previous studies presented in the literature. This results indicates that even in the more developed municipalities, the gap between rich and poor is increasing