Economic Growth and Income Inequality in Algeria: A Theoretical and Empirical ARDL Assessment

Hadji, Youssouf; Brouki, Abderrahmane

مجلة الاقتصاد وادارة الاعمال
Volume 9, Numéro 1, Pages 22-46
2025-06-30

Economic Growth And Income Inequality In Algeria: A Theoretical And Empirical Ardl Assessment

Authors : Hadji Youssouf . Brouki Abderrahmane .

Abstract

This study investigates the growth-inequality nexus in Algeria over the period 1980–2023 using an ARDL model to capture short-run and long-run dynamics. Findings reveal that economic growth slightly reduces inequality, but oil dependence, fiscal inefficiencies, and foreign reserves exacerbate disparities, while FDI fosters inclusivity. Short-run effects show volatile redistributive shifts, with inflation and oil shocks widening inequality, while fiscal and monetary adjustments offer delayed corrections. The results confirm a rapid adjustment to equilibrium, emphasizing Algeria’s structural vulnerabilities. Contrary to Kuznets’ hypothesis (1955), which predicts an inverted U-shaped relationship between growth and inequality, the findings indicate that inequality in Algeria remains structurally persistent despite economic expansion, largely due to resource dependence and weak redistributive mechanisms. These results underscore the need for economic diversification and targeted policy reforms to achieve sustainable and equitable growth.