How should I regress income inequality on economic growth? I would like to know which variables to use to regress income inequality on economic growth. For income inequality, I am thinking of using the Gini index, but don't know what measurement exactly.
For the growth should I use GDP per capita, GDP per capita growth, real GDP per capita, or just annual GDP values?
If your are interested in the statistic relationship between income inequality and economic growth, you should use GDP per capita growth since the others indicate level rather than growth.
More generally, the choice of the variable in your (and any other) regression depends on your economics model, otherwise you are just doing some linear projections.
A good reference you may start with this topic is &quot;Banerjee, A. V., &amp; Duflo, E. (2003). Inequality and growth: What can the data say?. Journal of economic growth, 8(3), 267-299.&quot;