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Inequality And Panel Income Changes: Conditions For Possibilities And Impossibilities

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  • Robert Duval‐Hernández
  • Gary S. Fields
  • George H. Jakubson

Abstract

Income changes in an economy are usually assessed through the changes over time in cross‐sectional variables such as economy‐wide inequality. An alternative is to use panel data to gauge income changes among identified income recipients. In this article, we analyze these two approaches taken together, each measured in multiple ways. We establish that under specific conditions, it is impossible to have falling inequality together with divergent panel income changes. We also provide conditions explaining when rising inequality can arise together with convergent panel changes. We provide the intuition behind these results and show when such results fail to hold.

Suggested Citation

  • Robert Duval‐Hernández & Gary S. Fields & George H. Jakubson, 2023. "Inequality And Panel Income Changes: Conditions For Possibilities And Impossibilities," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 64(1), pages 295-324, February.
    • Handle: RePEc:wly:iecrev:v:64:y:2023:i:1:p:295-324
    DOI: 10.1111/iere.12603
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    References listed on IDEAS

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