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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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Cited by:
  1. 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.
  2. Asli Demirguc-Kunt & Ross Levine, 2009. "Finance and Inequality: Theory and Evidence," NBER Working Papers 15275, National Bureau of Economic Research, Inc.
  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. Hyeok Jeong & Robert Townsend, 2007. "Sources of TFP growth: occupational choice and financial deepening," Economic Theory, Springer, vol. 32(1), pages 179-221, July.

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