What About the People, Though?

In a developmental context, income inequality has so far been investigated primarily from the angle of its relationship with economic growth. This paper contributes to the limited but growing body of empirical literature examining the interplay between income inequality and human development, here perceived through the capabilities approach. Fixed effects models do not suggest the existence of a within-country relationship between income inequality and development outcomes. However, the validity of FE models is undermined by sample properties. Between estimator and pooled OLS show a negative association between income inequality and life expectancy, daily caloric supply, and human rights protection. The relationship between income inequality and years of education, secondary enrollment gender gap, and polity is revealed when interacting the inequality measure with country income group, showing a negative relationship in the lower income groups. The results further show a fairly consistent and statistically significant relationship between measures of aggregate per capita income and development outcomes. However, the results indicate that the positive contributions to human development caused by an increase in GDP can be more than offset if it is accompanied by the growth of income inequality, suggesting a complementarity between the reduction of income inequality and other development goals