Income Inequality and Macroeconomic Volatility: An Empirical Investigation
AbstractRecently, 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, we regress income inequality on volatility, defined as the standard deviation of the rate of output growth. We 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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Bibliographic InfoPaper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 1999-W20.
Date of creation: 01 Jul 1999
Date of revision:
income inequality; output volatility; cross-country regressions;
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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