Economic Growth and Income Inequality: Empirical Evidence from North African Countries

This paper examines the empirical relationship between economic growth and income inequality for 4 countries of North Africa (Tunisia, Algeria, Morocco and Egypt) over the period 1970-2007. The results of this paper indicate that the long-run growth elasticity of income inequality is negative and signifi cant implying that keeping other factors constant; more income inequality reduces economic growth. Moreover, this paper fi nds evidence that more physical and human capital investment and higher openness to trade have statistically signifi cant impact on enhancing economic growth and reducing poverty