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The Ricardian Vice: Why Sala-i-Martin’s calculations of world income inequality are wrong

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Author Info

  • Branko Milanovic

    (World Bank)

Abstract

The paper discusses recent world income inequality calculations by Sala- i-Martin. It shows that the two main problems with which the author had to grapple (too few data to derive countries’ income distributions, and sparseness of such data in time) are not solved in a satisfactory fashion. They, and several other simplifying assumptions, make Sala-i- Martin results very dubious. We argue that Sala-i-Martin has ended up by producing a population-weighted inter-national distribution of income augmented by a constant shift parameter and not a distribution of income among world citizens.

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File URL: http://128.118.178.162/eps/hew/papers/0305/0305003.pdf
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Bibliographic Info

Paper provided by EconWPA in its series HEW with number 0305003.

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Date of creation: 09 May 2003
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Handle: RePEc:wpa:wuwphe:0305003

Note: Type of Document - pdf; prepared on IBM PC - ; to print on HP;
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Web page: http://128.118.178.162

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Keywords: income inequality; world; globalization;

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References

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  1. Schultz, T.P., 1998. "Inequality in the Distribution of Personal Income in the World: How It Is Changing and Why," Papers 784, Yale - Economic Growth Center.
  2. Danny Quah, 2002. "One Third of the Worlds Growth and Inequality," CEP Discussion Papers dp0535, Centre for Economic Performance, LSE.
  3. Branko Milanovic, 2002. "True World Income Distribution, 1988 and 1993: First Calculation Based on Household Surveys Alone," Economic Journal, Royal Economic Society, vol. 112(476), pages 51-92, January.
  4. Quah, Danny T, 1997. " Empirics for Growth and Distribution: Stratification, Polarization, and Convergence Clubs," Journal of Economic Growth, Springer, vol. 2(1), pages 27-59, March.
  5. Danny Quah, 2002. "One third of the world's growth and inequality," LSE Research Online Documents on Economics 2019, London School of Economics and Political Science, LSE Library.
  6. T. Paul Schultz, 1998. "Inequality in the Distribution of Personal Income in the World: How it is Changing and Why," Working Papers 784, Economic Growth Center, Yale University.
  7. Quah, Danny, 1997. "Empirics for Growth and Distribution: Stratification, Polarization, and Convergence Clubs," CEPR Discussion Papers 1586, C.E.P.R. Discussion Papers.
  8. Quah, Danny, 2002. "One Third of the World's Growth and Inequality," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  9. Mukand, Sharun W. & Rodrik, Dani, 2002. "In Search of the Holy Grail: Policy Convergence, Experimentation and Economic Performance," CEPR Discussion Papers 3525, C.E.P.R. Discussion Papers.
  10. Steve Dowrick & Muhammad Akmal, 2005. "Contradictory Trends In Global Income Inequality: A Tale Of Two Biases ," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 51(2), pages 201-229, 06.
  11. Jordi Galí & Tommaso Monacelli, 2004. "Monetary policy and exchange rate volatility in a small open economy," Economics Working Papers 835, Department of Economics and Business, Universitat Pompeu Fabra.
  12. Xavier Sala-i-Martin, 2002. "The disturbing "rise" of global income inequality," Discussion Papers 0102-44, Columbia University, Department of Economics.
  13. Quah, Danny, 2002. "One Third of the World's Growth and Inequality," CEPR Discussion Papers 3316, C.E.P.R. Discussion Papers.
  14. Chotikapanich, Duangkamon & Valenzuela, Rebecca & Rao, D S Prasada, 1997. "Global and Regional Inequality in the Distribution of Income: Estimation with Limited and Incomplete Data," Empirical Economics, Springer, vol. 22(4), pages 533-46.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. La inequidad condenable: ´Dime donde naces…´
    by juanhmex in Pasado y Presente de la Economia Mundial on 2013-02-19 11:55:19
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Cited by:
  1. James Galbraith, 2009. "Inequality, unemployment and growth: New measures for old controversies," Journal of Economic Inequality, Springer, vol. 7(2), pages 189-206, June.
  2. Duangkamon Chotikapanich & William E. Griffiths & D.S. Prasada Rao, 2005. "Estimating and Combining National Income Distributions using Limited Data," Department of Economics - Working Papers Series 926, The University of Melbourne.
  3. Yin Zhang & Guanghua Wan, 2006. "Globalization and the Urban Poor in China," Dundee Discussion Papers in Economics 196, Economic Studies, University of Dundee.
  4. Leandro Prados de la Escosura, 2007. "International inequality and polarization in living standards, 1870-2000 : evidence from the Western World," Working Papers in Economic History wp07-05, Universidad Carlos III, Departamento de Historia Económica e Instituciones.
  5. Branko Milanovic & Lyn Squire, 2005. "Does Tariff Liberalization Increase Wage Inequality? Some Empirical Evidence," NBER Working Papers 11046, National Bureau of Economic Research, Inc.
  6. Francisco Rodriguez & Arjun Jayadev, 2010. "The Declining Labor Share of Income," Human Development Research Papers (2009 to present) HDRP-2010-36, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).
  7. Goerlich, Francisco José & Mas, Matilde, 2004. "Distribución personal de la renta en España. 1973-2001
    [Personal income distribution in Spain. 1973-2001]
    ," MPRA Paper 15830, University Library of Munich, Germany, revised 2004.
  8. Capeau, Bart & Decoster, Andre, 2004. "The Rise or Fall of World Inequality: A Spurious Controversy?," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  9. Milanovic, Branko, 2006. "Global income inequality : what it is and why it matters," Policy Research Working Paper Series 3865, The World Bank.
  10. Yunker, James A., 2004. "Could a Global Marshall Plan be Successful? An Investigation Using The WEEP Simulation Model," World Development, Elsevier, vol. 32(7), pages 1109-1137, July.
  11. Nissanke, Machiko & Thorbecke, Erik, 2005. "Channels and Policy Debate in the Globalization-Inequality-Poverty Nexus," Working Paper Series DP2005/08, World Institute for Development Economic Research (UNU-WIDER).
  12. Ricardo Fuentes, 2005. "Poverty, Pro-Poor Growth and Simulated Inequality Reduction," Human Development Occasional Papers (1992-2007) HDOCPA-2005-11, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).

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