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Parametric Estimations of the World Distribution of Income

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Author Info
Maxim Pinkovskiy
Xavier Sala-i-Martin
Abstract

We use a parametric method to estimate the income distribution for 191 countries between 1970 and 2006. We estimate the World Distribution of Income and estimate poverty rates, poverty counts and various measures of income inequality and welfare. Using the official $1/day line, we estimate that world poverty rates have fallen by 80% from 0.268 in 1970 to 0.054 in 2006. The corresponding total number of poor has fallen from 403 million in 1970 to 152 million in 2006. Our estimates of the global poverty count in 2006 are much smaller than found by other researchers. We also find similar reductions in poverty if we use other poverty lines. We find that various measures of global inequality have declined substantially and measures of global welfare increased by somewhere between 128% and 145%. We analyze poverty in various regions. Finally, we show that our results are robust to a battery of sensitivity tests involving functional forms, data sources for the largest countries, methods of interpolating and extrapolating missing data, and dealing with survey misreporting.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 15433.

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Date of creation: Oct 2009
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Handle: RePEc:nbr:nberwo:15433

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F01 - International Economics - - General - - - Global Outlook
O1 - Economic Development, Technological Change, and Growth - - Economic Development

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  1. Sen, Amartya, 1974. "Informational bases of alternative welfare approaches : Aggregation and income distribution," Journal of Public Economics, Elsevier, vol. 3(4), pages 387-403, November. [Downloadable!] (restricted)
  2. Charles I. Jones, . "On the Evolution of the World Income Distribution," Working Papers 97009, Stanford University, Department of Economics. [Downloadable!]
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  3. Ahluwalia, Montek S. & Carter, Nicholas G. & Chenery, Hollis B., 1979. "Growth and poverty in developing countries," Journal of Development Economics, Elsevier, vol. 6(3), pages 299-341, August. [Downloadable!] (restricted)
  4. Stephen P. Jenkins, 2007. "Inequality and the GB2 income distribution," Working Papers 73, ECINEQ, Society for the Study of Economic Inequality. [Downloadable!]
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  5. Xavier Sala-i-Martin, 2006. "The World Distribution of Income: Falling Poverty and ... Convergence, Period," The Quarterly Journal of Economics, MIT Press, vol. 121(2), pages 351-397, May. [Downloadable!] (restricted)
  6. Xavier Sala-i-Martin, 2002. "The World Distribution of Income (estimated from Individual Country Distributions)," NBER Working Papers 8933, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. Danny Quah, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," CEP Discussion Papers dp0280, Centre for Economic Performance, LSE. [Downloadable!]
  8. Salem, A B Z & Mount, T D, 1974. "A Convenient Descriptive Model of Income Distribution: The Gamma Density," Econometrica, Econometric Society, vol. 42(6), pages 1115-27, November. [Downloadable!] (restricted)
  9. McDonald, James B. & Xu, Yexiao J., 1995. "A generalization of the beta distribution with applications," Journal of Econometrics, Elsevier, vol. 69(2), pages 427-428, October. [Downloadable!] (restricted)
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  10. Quah, Danny, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," CEPR Discussion Papers 1355, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  11. Metcalf, Charles E, 1969. "The Size Distribution of Personal Income during the Business Cycle," American Economic Review, American Economic Association, vol. 59(4), pages 657-68, Part I Se. [Downloadable!] (restricted)
  12. Pestieau, Pierre & Possen, Uri M, 1979. "A Model of Wealth Distribution," Econometrica, Econometric Society, vol. 47(3), pages 761-72, May. [Downloadable!] (restricted)
  13. Chotikapanich, Duangkamon & Prasada Rao, D.S. & Griffiths, William E. & Valencia, Vicar, 2007. "Global Inequality: Recent Evidence and Trends," Working Papers UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
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  15. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September. [Downloadable!] (restricted)
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