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Income Distribution and Development

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  • Frances Stewart

Abstract

Income distribution is extremely important for development, since it influences the cohesion of society, determines the extent of poverty for any given average per capita income and the poverty-reducing effects of growth, and even affects people's health. The paper reviews the connections between income distribution and economic growth. It finds that the Kuznets hypothesis that income distribution worsens as levels of income increase is not at all strongly supported by the evidence, while growth rates of income are not systematically related to changes in income distribution. However, evidence is accumulating that more equal income distribution raises economic growth. Both political and economic explanations have been advanced. The finding suggests that more equal income distribution is desirable both for equity and for promoting growth.

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Paper provided by Queen Elizabeth House, University of Oxford in its series QEH Working Papers with number qehwps37.

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Handle: RePEc:qeh:qehwps:qehwps37

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Cited by:
  1. Branko Milanovic & Lyn Squire, 2007. "Does Tariff Liberalization Increase Wage Inequality? Some Empirical Evidence," NBER Chapters, in: Globalization and Poverty, pages 143-182 National Bureau of Economic Research, Inc.
  2. Bigsten, Arne & Levin, Jorgen, 2001. "Growth, Income Distribution, and Poverty: A Review," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  3. Joseph E. Mullat, 2003. "Judging Social Welfare Policy with the Solving of the Bargaining Problem," Game Theory and Information, EconWPA 0304004, EconWPA, revised 26 Apr 2003.
  4. Ananya Ghosh Dastidar, 2004. "Structural Change and Income Distribution in Developing Economies: Evidence from a Group of Asian and Latin American Countries," Working papers 121, Centre for Development Economics, Delhi School of Economics.
  5. Jonathan Temple, 2002. "Wage Inequality in a Dual Economy," Bristol Economics Discussion Papers 02/531, Department of Economics, University of Bristol, UK.

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