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Productivity Growth, Poverty Reduction and Income Inequality: New Empirical Evidence

Author

Listed:
  • Mahamat Hamit-Haggar

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UCA [2017-2020] - Université Clermont Auvergne [2017-2020] - CNRS - Centre National de la Recherche Scientifique)

  • Malick Souare

Abstract

There is a long-standing view that economic growth is the most powerful instrument for reducing poverty. In dynamic economies most economic growth comes from productivity growth, and yet the literature concerning the relationship between productivity changes and poverty is sparse. Against this backdrop, this paper examines the impact of productivity growth on income and human poverty, and assesses the role played by the income distribution in that relationship. Using cross-country data to conduct a regional comparative analysis, we find that productivity growth is more relevant for poverty reduction than the more commonly used indicator economic growth – a finding that is robust across regions. We also find that the poverty-reducing impact of productivity growth is stronger in countries with relatively low income inequality. These findings suggest that countries attempting to reach their objectives of eradicating poverty should pursue policies that foster productivity growth; and that productivity growth that is accompanied by progressive distributional change is even better for alleviating poverty.

Suggested Citation

  • Mahamat Hamit-Haggar & Malick Souare, 2016. "Productivity Growth, Poverty Reduction and Income Inequality: New Empirical Evidence," Post-Print hal-01875987, HAL.
  • Handle: RePEc:hal:journl:hal-01875987
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    Keywords

    Productivity Growth; Economic Growth; Poverty; Inequality; Regional Analysis;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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