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On the social welfare interpretation of growth incidence curves

Author

Listed:
  • Yonatan Berman

    (King’s College London)

  • François Bourguignon

    (Paris School of Economics)

Abstract

The Growth Incidence Curve (GIC), introduced in the poverty measurement literature by Ravallion and Chen (Econ. Lett. 78(1), 93–99, 2003), proved to be a valuable and widely used tool to analyze the impact of growth on poverty and its ‘pro-poorness’. Beyond pro-poorness, however, the relationship between the shape of GICs and social welfare is ambiguous. If a declining GIC, together with a positive overall rate of growth, is unambiguously associated with a social welfare gain, such a shape is not the most common and the reciprocal is not necessarily true. This paper analyzes the social welfare properties of GICs, as well as their non-anonymous counterpart (NAGICs), which describe how income growth depends on the initial rank of individuals in the initial income distribution. NAGICs thus account not only for the change in the distribution of income but also for income mobility, and differ conceptually from their anonymous counterpart. However, their social welfare interpretation proves to be very similar.

Suggested Citation

  • Yonatan Berman & François Bourguignon, 2023. "On the social welfare interpretation of growth incidence curves," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 21(3), pages 723-741, September.
    • Handle: RePEc:spr:joecin:v:21:y:2023:i:3:d:10.1007_s10888-023-09598-2
    DOI: 10.1007/s10888-023-09598-2
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    References listed on IDEAS

    as
    1. Van Kerm, Philippe, 2009. "Income mobility profiles," Economics Letters, Elsevier, vol. 102(2), pages 93-95, February.
    2. Florent Bresson & Jean-Yves Duclos & Flaviana Palmisano, 2019. "Intertemporal pro-poorness," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 52(1), pages 65-96, January.
    3. Flaviana Palmisano & Vito Peragine, 2015. "The Distributional Incidence of Growth: A Social Welfare Approach," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 61(3), pages 440-464, September.
    4. Flaviana Palmisano & Dirk Van de gaer, 2016. "History-dependent growth incidence: a characterization and an application to the economic crisis in Italy," Oxford Economic Papers, Oxford University Press, vol. 68(2), pages 585-603.
    5. Stephen P. Jenkins & Philippe Van Kerm, 2016. "Assessing Individual Income Growth," Economica, London School of Economics and Political Science, vol. 83(332), pages 679-703, October.
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    7. François Bourguignon, 2011. "Non-anonymous growth incidence curves, income mobility and social welfare dominance," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 9(4), pages 605-627, December.
    8. Son, Hyun Hwa, 2004. "A note on pro-poor growth," Economics Letters, Elsevier, vol. 82(3), pages 307-314, March.
    9. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
    10. Michael Grimm, 2007. "Removing the anonymity axiom in assessing pro-poor growth," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 5(2), pages 179-197, August.
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    More about this item

    Keywords

    Growth; Mobility; Inequality; Social welfare;
    All these keywords.

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • H0 - Public Economics - - General
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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