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Inequality, income and poverty: comparative global evidence


  • Augustin Kwasi Fosu


Analysing a large sample of 1980-2004 unbalanced panel data, the current study presents comparative global evidence on the role of (income) inequality in poverty reduction. The evidence involves both an indirect channel via the tendency of high inequality to decrease the rate at which income is transformed to poverty reduction, and the tendency of rising inequality to increase poverty. Based on the basic-needs approach, an analysis-of-covariance model is estimated, with the headcount measure of poverty as the dependent variable, and the Gini coefficient and PPP-adjusted mean income as explanatory variables. The study finds that the responsiveness of poverty to income growth is a decreasing function of inequality, and that the income elasticity of poverty is actually smaller than the inequality elasticity. Thus, income distribution can play a more important role than might be traditionally acknowledged. Found also is a large variation across regions (and countries) in the poverty effects of inequality. A version of this paper has been accepted for publication in Social Science Quarterly.

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  • Augustin Kwasi Fosu, 2010. "Inequality, income and poverty: comparative global evidence," Brooks World Poverty Institute Working Paper Series 14010, BWPI, The University of Manchester.
  • Handle: RePEc:bwp:bwppap:14010

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    1. Ram, Rati, 1985. "The role of real income level and income distribution in fulfillment of basic needs," World Development, Elsevier, vol. 13(5), pages 589-594, May.
    2. Dollar, David & Kraay, Aart, 2002. "Growth Is Good for the Poor," Journal of Economic Growth, Springer, vol. 7(3), pages 195-225, September.
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    5. Augustin Kwasi Fosu, 2008. "Inequality and the growth-poverty nexus: specification empirics using African data," Applied Economics Letters, Taylor & Francis Journals, vol. 15(7), pages 563-566.
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    9. Frederick Solt, 2009. "Standardizing the World Income Inequality Database," Social Science Quarterly, Southwestern Social Science Association, vol. 90(2), pages 231-242.
    10. Goldstein, Joshua S., 1985. "Basic human needs: The plateau curve," World Development, Elsevier, vol. 13(5), pages 595-609, May.
    11. Frederick Solt, 2009. "Standardizing the World Income Inequality Database," LIS Working papers 496, LIS Cross-National Data Center in Luxembourg.
    12. Adelman, Irma, 1975. "Development Economics-A Reassessment of Goals," American Economic Review, American Economic Association, vol. 65(2), pages 302-309, May.
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