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Global inequality when unequal countries create unequal people

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  • Ravallion, Martin

Abstract

Current global inequality measures assume that national-mean income does not matter to economic welfare at given household income as measured in surveys. The paper questions that assumption on theoretical and empirical grounds and finds that prominent stylized facts about global inequality are not robust. At one extreme, theories of relative deprivation yield nationalistic measures whereby global inequality is average within-country inequality, which is rising. However, other theories and evidence point instead to the benefits of living in a richer country. Parameter values consistent with research on global subjective wellbeing imply higher inequality than prevailing measures, though falling since 1990.

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  • Ravallion, Martin, 2019. "Global inequality when unequal countries create unequal people," European Economic Review, Elsevier, vol. 111(C), pages 85-97.
  • Handle: RePEc:eee:eecrev:v:111:y:2019:i:c:p:85-97
    DOI: 10.1016/j.euroecorev.2018.09.003
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    More about this item

    Keywords

    Global inequality; Surveys; Relative income; Wagner's Law; Subjective wellbeing;
    All these keywords.

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • D6 - Microeconomics - - Welfare Economics
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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