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On the social welfare interpretation of growth incidence curves

Author

Listed:
  • Yonatan Berman

    (King’s College London)

  • François Bourguignon

    (Paris School of Economics)

Abstract

The Growth Incidence Curve (GIC), introduced in the poverty measurement literature by Ravallion and Chen (Econ. Lett. 78(1), 93–99, 2003), proved to be a valuable and widely used tool to analyze the impact of growth on poverty and its ‘pro-poorness’. Beyond pro-poorness, however, the relationship between the shape of GICs and social welfare is ambiguous. If a declining GIC, together with a positive overall rate of growth, is unambiguously associated with a social welfare gain, such a shape is not the most common and the reciprocal is not necessarily true. This paper analyzes the social welfare properties of GICs, as well as their non-anonymous counterpart (NAGICs), which describe how income growth depends on the initial rank of individuals in the initial income distribution. NAGICs thus account not only for the change in the distribution of income but also for income mobility, and differ conceptually from their anonymous counterpart. However, their social welfare interpretation proves to be very similar.

Suggested Citation

  • Yonatan Berman & François Bourguignon, 2023. "On the social welfare interpretation of growth incidence curves," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 21(3), pages 723-741, September.
    • Handle: RePEc:spr:joecin:v:21:y:2023:i:3:d:10.1007_s10888-023-09598-2
    DOI: 10.1007/s10888-023-09598-2
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    Keywords

    Growth; Mobility; Inequality; Social welfare;
    All these keywords.

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • H0 - Public Economics - - General
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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