Are inequality and poverty a brake for economic growth in Mexico? Correlation and causality from a regional perspective

The Mexican economy has been characterized by low growth accompanied by high-income inequality. To estimate the relation and the causality of inequality and poverty in economic growth, a panel data model was established at the state level, to relate the Gini coefficient and the poverty index with the growth rate of the gross domestic product (GDP). The coefficient of the secondary education variable was positive, which suggests that the formation of education level is relevant for promoting growth. The results show that the Gini coefficient and the proportion of poverty within the total population have an inverse relationship with economic growth. The Granger test indicates a causal effect of inequality and poverty on growth.