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Critical percentiles for equalizing growth

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Abstract

This paper provides precise conditions under which incremental growth reduces inequality. Critical points are derived, above which incremental income increases inequality, and below which it decreases inequality. According to the Gini coefficient, the lower bound for this critical point is the median individual. Surprisingly, critical points associated with ‘absolute’ and ‘centrist’ measures of inequality are sometimes higher than those implied by ‘relative’ measures. The results are illustrated using data from UNU-WIDER’s World Income Inequality Database. According to the Gini, critical points are typically found to lie between the 62nd and 85th percentiles, in the least, and most, unequal countries, respectively.

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  • Laurence Roope, 2015. "Critical percentiles for equalizing growth," CSAE Working Paper Series 2015-16, Centre for the Study of African Economies, University of Oxford.
    • Handle: RePEc:csa:wpaper:2015-16
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    1. Miguel Niño‐Zarazúa & Laurence Roope & Finn Tarp, 2017. "Global Inequality: Relatively Lower, Absolutely Higher," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63(4), pages 661-684, December.

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    More about this item

    Keywords

    growth; inequality; inequality measurement;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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