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Divergence, Big Time

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  • Lant Pritchett

Abstract

Historical data are unnecessary to demonstrate that perhaps the basic fact of modern economic history is massive absolute divergence in per capita income across countries. A plausible lower bound on per capita income can be combined with estimates of its current level in the poorer countries to place an upper bound on long-run income growth. Between 1870 and 1990, the ratio of richest to poorest countries' income increased from roughly 9 to 1 to 45 to 1, the standard deviation of (natural log) per capita income doubled, and the average income gap between the richest and all other countries grew nearly tenfold from $1,286 to $12,000.

Suggested Citation

  • Lant Pritchett, 1997. "Divergence, Big Time," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 3-17, Summer.
    • Handle: RePEc:aea:jecper:v:11:y:1997:i:3:p:3-17
    Note: DOI: 10.1257/jep.11.3.3
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.11.3.3
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    More about this item

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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