What do panel data say on inequality and GDP? New evidence at US state-level

This paper investigates the empirical relationship between inequality and per capita GDP for the US using panel data for 50 states over the period 1960–2015. The paper uses new recently released data for inequality and a novel panel estimator with interactive fixed effects. The empirical results seem to suggest the existence of a S-shaped relationship between inequality and per capita GDP. •The relationship between inequality and GDP is investigated for 50 US states.•New data for inequality is considered in the analysis.•The analysis uses a recently developed panel estimator with interactive fixed effects.•The examined relationship shows a S-shaped curve.