Recently, there has been a resurgence in the interest in the determinants of income inequality across countries. This paper adds to this literature by examining the role of one further explanatory variable: macroeconomic volatility. Using a cross-section of developed and developing countries, the authors regress income inequality on volatility, defined as the standard deviation of the rate of output growth. They find that greater volatility increases the Gini coefficient and the income share of the top quintile, while it reduces the share of the other quintiles. The other variable that seems to play an important role is relative labour productivity, supporting previous findings.
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Paper provided by Economics Group, Nuffield College, University of Oxford in its series Economics Papers with number
1999-w20.
Find related papers by JEL classification: I30 - Health, Education, and Welfare - - Welfare and Poverty - - - General O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
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Theo S Eicher & Cecilia Garcia Penalosa, .
"Inequality and Growth,"
Working Papers
0083, University of Washington, Department of Economics.
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