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Growth, Inequality and Poverty: Looking Beyond Averages
- World Development
, 2001
"... this article were received from Nancy Birdsall, Bill Easterly, Paul Isenman, Ravi Kanbur, Aart Kraay, Branko Milanovic, Giovanna Prennushi, Dominique van de Walle, Nicolas van de Walle, Michael Walton and seminar participants at the World Bank. These are the views of the author, and need not reflect ..."
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Cited by 204 (3 self)
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this article were received from Nancy Birdsall, Bill Easterly, Paul Isenman, Ravi Kanbur, Aart Kraay, Branko Milanovic, Giovanna Prennushi, Dominique van de Walle, Nicolas van de Walle, Michael Walton and seminar participants at the World Bank. These are the views of the author, and need not reflect those of the World Bank or any affiliated organization. 1.
Inequality and Growth: Why Differential Fertility Matters
, 2002
"... We develop a new theoretical link between inequality and growth. In our model, fertility and education decisions are interdependent. Poor parents decide to have many children and invest little in education. A mean-preserving spread in the income distribution increases the fertility differential betw ..."
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Cited by 85 (5 self)
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We develop a new theoretical link between inequality and growth. In our model, fertility and education decisions are interdependent. Poor parents decide to have many children and invest little in education. A mean-preserving spread in the income distribution increases the fertility differential between the rich and the poor, which implies that more weight gets placed on families who provide little education. Consequently, an increase in inequality lowers average education and, therefore, growth. We find that this fertility-differential effect accounts for most of the empirical relationship between inequality and growth.
Can We Discern The Effect Of Globalization On Income Distribution? Evidence from Household Budget Surveys
"... The effects of globalization on income distribution within rich and poor countries are a matter of controversy. While international trade theory in its most abstract formulation implies that increased trade and foreign investment should make income distribution more equal in poor countries and less ..."
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Cited by 77 (6 self)
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The effects of globalization on income distribution within rich and poor countries are a matter of controversy. While international trade theory in its most abstract formulation implies that increased trade and foreign investment should make income distribution more equal in poor countries and less equal in rich countries, finding these effects has proved elusive. The paper presents another attempt to discern the effects of globalization by using the data from household budget surveys and looking at the impact of openness and direct foreign investment on relative income shares of low and high deciles. We find some evidence that at very low average income level, it is the rich who benefit from openness. As income level rises, that is around the income level of Colombia, Chile or Czech republic, the situation changes and it is the relative income of the poor and the middle class that rises compared to the rich. It seems that openness makes income distribution worse before making it better---or differently that the effect of openness on country's income distribution depends on country's initial income level. Keywords: income distribution, inequality, globalization JEL classification: D31, F15, I3. World Bank Policy Research Working Paper 2876, April 2002 The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the view of the World Bank, its Executive Dire...
Targeted Transfers in Poor Countries: Revisiting the Trade-Offs and Policy Options
, 2003
"... Two trade-offs have been widely seen to severely constrain the scope for attacking poverty using redistributive transfers in poor countries: an equity-efficiency tradeoff and an insurance-efficiency tradeoff. This article provides a critical overview of recent theoretical and empirical work that ..."
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Cited by 54 (0 self)
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Two trade-offs have been widely seen to severely constrain the scope for attacking poverty using redistributive transfers in poor countries: an equity-efficiency tradeoff and an insurance-efficiency tradeoff. This article provides a critical overview of recent theoretical and empirical work that has called into question the extent of these tradeoffs in poor countries. It is argued that these aggregate trade-offs are often exaggerated; indeed, they may not even be binding constraints in practice, given market failures. There appears to be scope for using carefully designed transfer schemes as an effective tool against both transient and chronic poverty. However, the same factors that weaken the tradeoffs also suggest that efficient redistributive policies might look rather different to the programs often found in practice.
Inequality and Economic Growth The Empirical Relationship Reconsidered in the Light of Comparable Data
, 2001
"... All of the recent empirical work on the relationship between income inequality and economic growth has used inequality data that are not consistently measured. This paper argues that this is inappropriate and shows that the significant negative correlation often found between income inequality and g ..."
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Cited by 52 (4 self)
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All of the recent empirical work on the relationship between income inequality and economic growth has used inequality data that are not consistently measured. This paper argues that this is inappropriate and shows that the significant negative correlation often found between income inequality and growth across countries is not robust when income inequality is measured in a consistent manner, using data from the World Income Inequality Database. However, evidence is found of a significant negative correlation between consistently measured inequality of expenditure data and economic growth for a sample of developing countries.
The Debate on Globalization, Poverty and Inequality: why measurement matters." World Bank Development Research Group Working Paper 3038. Available at http://econ.worldbank.org
, 2003
"... Abstract: In the last year or so, markedly different claims have been heard within the development community about how just much progress is being made against poverty and inequality in the current period of “globalization. ” This paper provides a non-technical overview of the conceptual and methodo ..."
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Cited by 50 (0 self)
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Abstract: In the last year or so, markedly different claims have been heard within the development community about how just much progress is being made against poverty and inequality in the current period of “globalization. ” This paper provides a non-technical overview of the conceptual and methodological issues underlying these conflicting claims. The paper argues that the dramatically differing positions taken in this debate often stem from differences in the concepts and definitions used and differences in data sources and measurement assumptions. These differences are often hidden from view in the debate, but they need to be considered carefully if one is to properly interpret the evidence. The paper argues that the best available evidence suggests that, if the rate of progress against absolute poverty in the developing world in the 1990s is maintained, then the Millennium Development Goal of halving the 1990 aggregate poverty rate by 2015 will be achieved on time in the aggregate, though not in all regions. The paper concludes with some observations on the implications for policy-oriented debates on globalization and pro-poor growth.
Polarization, Politics and Property Rights Links between Inequality and Growth
"... We argue that social polarization reduces the security of property and contract rights and, through this channel, reduces growth. The first hypothesis is supported by cross-country empirical evidence indicating that social polarization in the form of income inequality, land inequality, and ethnic te ..."
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Cited by 44 (0 self)
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We argue that social polarization reduces the security of property and contract rights and, through this channel, reduces growth. The first hypothesis is supported by cross-country empirical evidence indicating that social polarization in the form of income inequality, land inequality, and ethnic tensions is inversely related to a commonly-used index of the security of contractual and property rights. In examining the second hypothesis, we restrict our attention to the highly contested role of inequality in income and wealth. The relationship between inequality and growth diminishes considerably when the security of property rights is controlled for in growth regressions. This and other evidence suggests that income inequality reduces growth through its effect on property rights, rather than through any of several competing channels that have been advanced in the literature.
Looking beyond averages in the trade and poverty debate
- World Development
, 2006
"... There has been much debate about how much poor people in developing countries gain from trade openness, as one aspect of “globalization. ” The paper views the issue through both “macro ” and “micro ” empirical lenses. The macro lens uses cross-country comparisons and aggregate time series data; the ..."
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Cited by 39 (0 self)
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There has been much debate about how much poor people in developing countries gain from trade openness, as one aspect of “globalization. ” The paper views the issue through both “macro ” and “micro ” empirical lenses. The macro lens uses cross-country comparisons and aggregate time series data; the micro lens uses household-level data combined with structural modeling of the impacts of specific trade reforms. Case studies are presented for China and Morocco. Both the macro and micro approaches cast doubt on some widely heard generalizations from both sides of the globalization debate. Additionally the micro lens indicates considerable heterogeneity in the welfare impacts of trade openness, with both gainers and losers among the poor. A number of covariates of the individual gains are identified. The results point to the importance of combining trade reforms with well-designed social protection policies.
Income Inequality and Macroeconomic Volatility: An Empirical Investigation
- Review of Development Economics
, 2005
"... We explore the impact of macroeconomic volatility on the distribution of income. Using a cross-section of developed and developing countries, we find that greater output volatility, defined as the standard deviation of the rate of output growth, is associated with a higher Gini coefficient and incom ..."
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Cited by 38 (5 self)
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We explore the impact of macroeconomic volatility on the distribution of income. Using a cross-section of developed and developing countries, we find that greater output volatility, defined as the standard deviation of the rate of output growth, is associated with a higher Gini coefficient and income share of the top quin-tile. The coefficients suggest that a strong effect on inequality resulting from a reduction in volatility: the Gini coefficient of a country like Chile would fall by 6 points if it were to reduce its volatility to the same level as Sweden or Norway. Our results seem not to be driven by the high-inequality/high-volatility Latin American countries. 1.
Does the Profile of Income Inequality Matter for Economic Growth?: Distinguishing between the effect of inequality in different parts of the income distribution
- Journal of Economic Growth
, 2005
"... Luxembourg Income Study (LIS), asblDoes the profile of income inequality matter for economic growth? Distinguishing between the top and bottom end effects of the income distribution ..."
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Cited by 24 (0 self)
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Luxembourg Income Study (LIS), asblDoes the profile of income inequality matter for economic growth? Distinguishing between the top and bottom end effects of the income distribution
