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What Drives Differences in Inequality Across Countries?

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  • Miguel Székely
  • Marianne Hilgert
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    Abstract

    This paper presents microeconomic simulation techniques to examine what drives differences in inequality across countries. The simulation decomposes cross-country inequality differences into the importance of individual decisions, such as fertility, mating, labor force participation, and household structure, while at the same time including information on the importance of different income sources. The decomposition is applied to household survey data from 35 countries from 6 regions in the world. The empirical results provide insights into the transmission mechanisms through which inequality is generated.

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    File URL: http://www.iadb.org/research/pub_hits.cfm?pub_id=WP-439&pub_file_name=pubWP-439.pdf
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    Bibliographic Info

    Paper provided by Inter-American Development Bank, Research Department in its series Research Department Publications with number 4243.

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    Date of creation: Nov 2000
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    Handle: RePEc:idb:wpaper:4243

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    1. Raquel Fernández & Richard Rogerson, 2001. "Sorting And Long-Run Inequality," The Quarterly Journal of Economics, MIT Press, vol. 116(4), pages 1305-1341, November.
    2. Haurin, Donald R & Hendershott, Patric H & Kim, Dongwook, 1993. "The Impact of Real Rents and Wages on Household Formation," The Review of Economics and Statistics, MIT Press, vol. 75(2), pages 284-93, May.
    3. Aghion, Philippe & Caroli, Eve & García-Peñalosa, Cecilia, 1999. "Inequality and Economic Growth: The Perspective of the New Growth Theories," Scholarly Articles 12502063, Harvard University Department of Economics.
    4. Deininger, K & Squire, L, 1996. "Measuring Income Inequality : A New Data-Base," Papers 537, Harvard - Institute for International Development.
    5. Behrman, Jere R., 1993. "Intrahousehold distribution and the family," Handbook of Population and Family Economics, in: M. R. Rosenzweig & Stark, O. (ed.), Handbook of Population and Family Economics, edition 1, volume 1, chapter 4, pages 125-187 Elsevier.
    6. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-42, June.
    7. Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, vol. 50(1), pages 193-211, January.
    8. Jeremy Greenwood & Nezih Guner & John A. Knowles, 2003. "More on Marriage, Fertility, and the Distribution of Income," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(3), pages 827-862, 08.
    9. Sutherland, H., 1996. "Households, Individuals and the Re-Distribution of Income," Cambridge Working Papers in Economics 9614, Faculty of Economics, University of Cambridge.
    10. Anthony B. Atkinson & Andrea Brandolini, 2000. "Promise and Pitfalls in the Use of 'Secondary' Data-Sets: Income Inequality in OECD Countries," Temi di discussione (Economic working papers) 379, Bank of Italy, Economic Research and International Relations Area.
    11. Frank A Cowell, 1996. "Family Instability, Family Incomes and Inequality," STICERD - Distributional Analysis Research Programme Papers 12, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    12. Maria Cancian & Deborah Reed, 1998. "Assessing The Effects Of Wives' Earnings On Family Income Inequality," The Review of Economics and Statistics, MIT Press, vol. 80(1), pages 73-79, February.
    13. Behrman, Jere R & Deolalikar, Anil B, 1993. "The Intrahousehold Distribution of Market Labour Supply in Rural South India," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 55(4), pages 409-20, November.
    14. Hongyi Li & Lyn Squire & Heng-fu Zou, 1998. "Explaining International and Intertemporal Variations in Income Inequality," CEMA Working Papers 73, China Economics and Management Academy, Central University of Finance and Economics.
    15. Michael Kremer, 1996. "How Much Does Sorting Increase Inequality?," NBER Working Papers 5566, National Bureau of Economic Research, Inc.
    16. Bourguignon, F. & Chiappori, P-A., 1991. "Collective Models of Household Behaviour: An Introduction," DELTA Working Papers 91-29, DELTA (Ecole normale supérieure).
    17. Carlson, Marcia & Danziger, Sheldon, 1999. "Cohabitation and the Measurement of Child Poverty," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 45(2), pages 179-91, June.
    18. Mattias Lundberg & Lyn Squire, 2003. "The simultaneous evolution of growth and inequality," Economic Journal, Royal Economic Society, vol. 113(487), pages 326-344, 04.
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    Cited by:
    1. T. H. Gindling, 2003. "La Desigualdad En América Central Durante Los Años Noventa," UMBC Economics Department Working Papers 03-109, UMBC Department of Economics.
    2. Francisco Haimovich, 2010. "Distribucion del Ingreso en América Latina: Caracterización de las Diferencias entre Países," Department of Economics, Working Papers 080, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata.
    3. Leonardo Gasparini & Francisco Haimovich & Hernán Winkler, 2006. "Distribución del Ingreso en América Latina: Explorando las Diferencias entre Países," CEDLAS, Working Papers 0034, CEDLAS, Universidad Nacional de La Plata.

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