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An investigation of cross-country incme differences

Author

Listed:
  • Pedro Cavalcanti Ferreira

    () (Graduate School of Economics-EPGE)

  • Joao victor Issler

    () (Graduate School of Economics-EPGE)

  • Samuel de Abreu Pessoa

    () (Graduate School of Economics-EPGE)

Abstract

This paper investigates the nature of income inequality across nations. Several exercises, such as variance decompositions, simulations and counter-factual analyses are performed. We find that, although total factor productivity has a leading role in explaining the dispersion of output per worker, countries grew in the past –and, consequently, are poor in the present– for different reasons. Even after correcting for productivity differences, some nations remain poor mostly because of low schooling of the labor force and other because they impose too many distortions to capital accumulation. Policy recommendations have to take country differences into account, or else they have a high chance of being either wrong or ineffective.

Suggested Citation

  • Pedro Cavalcanti Ferreira & Joao victor Issler & Samuel de Abreu Pessoa, 2005. "An investigation of cross-country incme differences," Revista de Analisis Economico – Economic Analysis Review, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines, vol. 20(2), pages 3-22, December.
  • Handle: RePEc:ila:anaeco:v:20:y:2005:i:2:p:3-22
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    References listed on IDEAS

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    More about this item

    Keywords

    Cross-Country Income inequality; Development; Total Factor Productivity; Aggregate Production Function;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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