In this paper, we shared the existing literature about inequality-growth nexus. Empirically, our baseline estimation and the sensitivity analysis have shown that inequality is positively, and very often even significantly, associated with economic growth both in short run and in long run. Our findings are contrast to the significant correlation between income inequality and economic growth that has been documented by Alesina and Roderick (1994) and by Persson and Tabellini (1994). Empirical exercise provides supports for the existence of Kuznets’ inverted-U curve in Pakistan under the investigation of time series data. The extension of Kuznets’ specification is conducted and results confirm the occurrence of inverted-S shaped curve.

Coefficients estimate of human resource development and unemployment seem to increase income inequality in the country. On contrary, local migration or urbanization improves income distribution in long run but insignificant in short span of time. Impact of remittances on income inequality is positive in long run but negative in short span of time. Literacy rate, life expectancy and foreign direct investment show income inequality increasing impact in the country.