Income Inequality, Income Growth and Government Redistribution in Malaysia: What Do We Know in the Long Run?


  • Soo Khoon Goh Universiti Sains Malaysia
  • Koi Nyen Wong Sunway University
  • Ayupp Kartinah University Malaysia Sarawak
  • You Wah Lai Universiti Sains Malaysia


Income inequality, income growth, redistribution, Malaysia


Malaysia has a good track record of reducing income inequality, especially between ethnic groups. In recent years, increasing attention has been paid to national inequality – notably by targeting the bottom 40% income group while sustaining growth with inclusivity. This paper uses the latest cointegration technique, namely, the augmented autoregressive distributed lag (A-ARDL) to examine the long-run determinants of income inequality in Malaysia. The long-run results suggest that income inequality is negatively driven by real GDP per capita and government redistribution of income. The findings provide some possible policy implications that could reduce income inequality in the long run, in particular, through the enhancement of the quality and skills of the workforce, and the government’s benevolent role by using redistributive instruments such as progressive income tax and cash transfers to low-income groups.


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Author Biographies

Soo Khoon Goh, Universiti Sains Malaysia

Centre for Policy Research and International Studies, Universiti Sains Malaysia

Koi Nyen Wong, Sunway University

Sunway Business School, Sunway University

Ayupp Kartinah, University Malaysia Sarawak

Faculty of Economics and Business, University Malaysia Sarawak

You Wah Lai, Universiti Sains Malaysia

School of Social Sciences, Universiti Sains Malaysia