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Measuring the Impact of Various Income Sources on the Link between Inequality and Development: Implications for the Kuznets Curve

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  • Joseph Deutsch
  • Jacques Silber

Abstract

To understand the link between inequality and development, a decomposition of the Gini index by income sources is used that emphasizes the role of three components measuring the impact of the shares of the sources, the degree to which they are unequally distributed, and their correlation with total income. Such a breakdown explains why the rising section of the Kuznets curve is mainly the consequence of the increasing share of wages while its declining section reflects the decreasing share of entrepreneurial income and the negative correlation between transfers and total income. The data sources were provided by the International Labour Office. Copyright Blackwell Publishing Ltd 2004.

Suggested Citation

  • Joseph Deutsch & Jacques Silber, 2004. "Measuring the Impact of Various Income Sources on the Link between Inequality and Development: Implications for the Kuznets Curve," Review of Development Economics, Wiley Blackwell, vol. 8(1), pages 110-127, February.
  • Handle: RePEc:bla:rdevec:v:8:y:2004:i:1:p:110-127
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    Cited by:

    1. Paul, Saumik, 2016. "Heterogeneous Structural Transformation and Growth Incidence across the Income Distribution: the Kuznets Curve Revisited," CEI Working Paper Series 2016-1, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    2. János Pénzes & Zoltán Bujdosó & Lóránt Dávid & Zsolt Radics & Gábor Kozma, 2014. "Differing development paths of spatial income inequalities after the political transition — by the example of Hungary and its regions," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(1), pages 73-84.
    3. Ayal Kimhi, 2010. "Entrepreneurship and income inequality in southern Ethiopia," Small Business Economics, Springer, vol. 34(1), pages 81-91, January.
    4. Monica Szeles, 2013. "Re-examining the relationship between economic growth and inequality in the New Member States," Quality & Quantity: International Journal of Methodology, Springer, vol. 47(5), pages 2799-2813, August.
    5. Gilad D. Aharonovitz, 2011. "Why Cannot Poor Countries Utilize Existing Knowledge? Expansion Of Firms And Human Capital Accumulation By Training," Economic Inquiry, Western Economic Association International, vol. 49(1), pages 108-121, January.
    6. Ayal Kimhi, 2004. "Growth, Inequality and Labor Markets in LDCs: A Survey," CESifo Working Paper Series 1281, CESifo Group Munich.
    7. Michele Giammatteo, 2007. "The bidimensional decomposition of inequality: A nested Theil approach," LIS Working papers 466, LIS Cross-National Data Center in Luxembourg.

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