Equation (7) is a standard instrumental variable (IV) equation in which the Gini coefficient is
instrumented for with a progressivity variable. That is to say, it provides estimates for the instrumented
effect of the Gini coefficient on economic growth. It estimates the effect of income inequality (Gini) on
the per capita GDP growth rate when it is affected by progressivity, thus exerting positive influence on
economic growth, so the sign of the coefficient estimate of δ1 will be positive as well.