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Assessment of Relationship between Growth and Inequality: Micro Evidence from Thailand

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  • Hyeok Jeong

Abstract

This paper shows that growth and income distribution dynamics are closely linked through occupation, financial intermediation, and education. We use the micro data from Thailand for 1976-1996. The compositional changes across these characteristics account for half of the Thai inequality increase and forty percent of the Thai growth and poverty reduction. Financial deepening and educational expansion contributed to increasing inequality while occupational transformation contributed to poverty alleviation. The changes in income gaps across the income-status groups, that is, divergence and then convergence, give rise to inverted- U inequality dynamics. These two growth-related components of inequality dynamics, composition and income-gap dynamics, explain virtually all the change in overall inequality, except its initial rise. Thus, inequality dynamics can be viewed as integral part of wider process of growth as Kuznets speculated.

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File URL: http://www.usc.edu/dept/LAS/economics/IEPR/Working%20Papers/IEPR_05.20_%5bJeong%5d.pdf
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Bibliographic Info

Paper provided by Institute of Economic Policy Research (IEPR) in its series IEPR Working Papers with number 05.20.

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Length: 43 pages
Date of creation: Mar 2005
Date of revision:
Handle: RePEc:scp:wpaper:05-20

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Keywords: Kuznets Dynamics; Growth; Inequality; Poverty;

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  1. Galor, Oded & Zeira, Joseph, 1988. "Income Distribution and Macroeconomics," MPRA Paper 51644, University Library of Munich, Germany, revised 01 Sep 1989.
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Citations

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Cited by:
  1. Robert M. Townsend & Hyeok Jeong, 2007. "Sources of TFP Growth: Occupational Choice and Financial Deepening," 2007 Meeting Papers 198, Society for Economic Dynamics.
  2. Pawasutipaisit, Anan & Townsend, Robert M., 2011. "Wealth accumulation and factors accounting for success," Journal of Econometrics, Elsevier, vol. 161(1), pages 56-81, March.
  3. Mathan Satchi & Jonathan Temple, 2006. "Growth and labour markets in developing countries," Bristol Economics Discussion Papers 06/581, Department of Economics, University of Bristol, UK.
  4. Anne Goujon & Samir K.C., 2009. "Past and Future of Human Capital in Southeast Asia: From 1970 to 2030," Working Papers 0607, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna.
  5. Asli Demirguc-Kunt & Ross Levine, 2009. "Finance and Inequality: Theory and Evidence," NBER Working Papers 15275, National Bureau of Economic Research, Inc.
  6. Nakavachara, Voraprapa, 2010. "Superior female education: Explaining the gender earnings gap trend in Thailand," Journal of Asian Economics, Elsevier, vol. 21(2), pages 198-218, April.

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