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The Bottom Twenty: An Analysis Of Income Inequality In High Income And Developing Countries, 1990-2010

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  • Christopher E.S. WARBURTON

Abstract

The theory that there is a link between income inequality and per capita income has variously been proposed with strong convictions. The theory generally presupposes that income inequality, where or when exists, will ultimately decline as macroeconomic performance (growth) improves over time. Using empirical analysis, econometric models, and time series data from 1990 to 2010, this paper finds that though the relationship between income inequality and per capita income may be theoretically valid for a variety of countries at different levels of economic growth, the relationship may not be statistically significant. Contrary to the inverted-U hypothesis, the empirical evidence suggests that distributive trends may not be sustainable and that institutional variables and policies might have more explanatory power over the subsequent trajectory of income inequality in rich and poorer countries.

Suggested Citation

  • Christopher E.S. WARBURTON, 2016. "The Bottom Twenty: An Analysis Of Income Inequality In High Income And Developing Countries, 1990-2010," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 16(2), pages 5-24.
  • Handle: RePEc:eaa:aeinde:v:16:y:2016:i:2_1
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    References listed on IDEAS

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    1. Alvargonzalez, M. & Lopez, A. & Perez, R., 2004. "Growth-Inequality Relationship. An Analytical Approach and Some Evidence for Latin America," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 4(2).
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    5. Ahluwalia, Montek S, 1976. "Income Distribution and Development: Some Stylized Facts," American Economic Review, American Economic Association, vol. 66(2), pages 128-135, May.
    6. United Nations UN, 2015. "The Millennium Development Goals Report 2015," Working Papers id:7222, eSocialSciences.
    7. Milanovic, Branko, 1997. "A simple way to calculate the Gini coefficient, and some implications," Economics Letters, Elsevier, vol. 56(1), pages 45-49, September.
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    1. repec:eaa:eerese:v:17:y2017:i:1_1 is not listed on IDEAS

    More about this item

    Keywords

    Corruption; Education; GNI; Kuznets; Income Inequality; Institutions; Taxes;

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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