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How Macroeconomic Factors Affect Income Distribution: The Cross-Country Evidence

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  • Mr. Michael Sarel

Abstract

This study develops a cross-section empirical framework to examine the relationship between the macroeconomic environment and trends in income distribution. The macroeconomic variables that are found to be associated with an improvement in income distribution are higher growth rate, higher income level, higher investment rate, real depreciation (especially for low-income countries), and improvement in terms of trade. The estimated significant effects of growth, income, and investment provide evidence that policies designed to promote investment and growth are likely also to contribute to an improvement in income distribution.

Suggested Citation

  • Mr. Michael Sarel, 1997. "How Macroeconomic Factors Affect Income Distribution: The Cross-Country Evidence," IMF Working Papers 1997/152, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1997/152
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    6. Ali A Ali & Ibrahim A. Elbadawi, 1999. "Inequality and the Dynamics of Poverty and Growth," CID Working Papers 32A, Center for International Development at Harvard University.
    7. Bucevska Vesna, 2019. "Determinants of Income Inequality in EU Candidate Countries: A Panel Analysis," Economic Themes, Sciendo, vol. 57(4), pages 397-413, December.
    8. Francisco J. Oliver-Márquez & Almudena Guarnido-Rueda & Ignacio Amate-Fortes & Diego Martínez-Navarro, 2022. "Is Income Inequality Influenced by Financial Knowledge? A Macroeconomic and Longitudinal Analysis," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(4), pages 3050-3075, December.
    9. Frances Stewart, 2003. "Income distribution and development," Chapters, in: John Toye (ed.), Trade and Development, chapter 10, Edward Elgar Publishing.
    10. Batuo E. Michael & George Kararach & Issam Malki, 2021. "Working Paper 353 - Inequality and the role of macroeconomic and institutional forces in Africa," Working Paper Series 2479, African Development Bank.
    11. Margaret S. McMillan & Alix Peterson Zwane & Nava Ashraf, 2007. "My Policies or Yours: Does OECD Support for Agriculture Increase Poverty in Developing Countries?," NBER Chapters, in: Globalization and Poverty, pages 183-240, National Bureau of Economic Research, Inc.
    12. Nguyen, Trang T.T., 2016. "Tax administration resources and Income inequality," MPRA Paper 74820, University Library of Munich, Germany.
    13. José De Gregorio & Jong-Wha Lee, 1999. "Education and Income Distribution: New Evidence from Cross-country Data," Documentos de Trabajo 55, Centro de Economía Aplicada, Universidad de Chile.
    14. Ali Abdel Gadir Ali, "undated". "Can the Sudan Reduce Poverty by Half by the Year 2015?," API-Working Paper Series 0304, Arab Planning Institute - Kuwait, Information Center.
    15. Kevin Sylwester, 2003. "Enrolment in Higher Education and Changes in Income Inequality," Bulletin of Economic Research, Wiley Blackwell, vol. 55(3), pages 249-262, July.
    16. Frances Stewart, "undated". "Adjustment and Poverty in Asia: Old Solutions and New Problems -," QEH Working Papers qehwps20, Queen Elizabeth House, University of Oxford.
    17. Ali A. Ali & Ibrahim A. Elbadawi, 1999. "Inequality and the Dynamics of Poverty and Growth," CID Working Papers 32, Center for International Development at Harvard University.
    18. José De Gregorio & Jong–Wha Lee, 2002. "Education and Income Inequality: New Evidence From Cross‐Country Data," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 48(3), pages 395-416, September.
    19. Cyn-Young Park & Rogelio Mercado, 2018. "Financial Inclusion, Poverty, And Income Inequality," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 63(01), pages 185-206, March.
    20. Edgar Pardo-Beltrán, 2002. "Effects of Income Distribution on Growth," SCEPA working paper series. 2002-16, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
    21. Mr. Vassili Prokopenko & Mr. Paul Holden, 2001. "Financial Development and Poverty Alleviation: Issues and Policy Implications for Developing and Transition Countries," IMF Working Papers 2001/160, International Monetary Fund.

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