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Macro-Structural Policies and Income Inequality in Low-Income Developing Countries

Author

Listed:
  • Ms. Stefania Fabrizio
  • Davide Furceri
  • Mr. Rodrigo Garcia-Verdu
  • Ms. Grace B Li
  • Mrs. Sandra V Lizarazo Ruiz
  • Ms. Marina Mendes Tavares
  • Mr. Futoshi Narita
  • Mr. Adrian Peralta

Abstract

Despite sustained economic growth and rapid poverty reductions, income inequality remains stubbornly high in many low-income developing countries. This pattern is a concern as high levels of inequality can impair the sustainability of growth and macroeconomic stability, thereby also limiting countries’ ability to reach the Sustainable Development Goals. This underscores the importance of understanding how policies aimed at boosting economic growth affect income inequality. Using empirical and modeling techniques, the note confirms that macro-structural policies aimed at raising growth payoffs in low-income developing countries can have important distributional consequences, with the impact dependent on both the design of reforms and on country-specific economic characteristics. While there is no one-size-fits-all recipe, the note explores how governments can address adverse distributional consequences of reforms by designing reform packages to make pro-growth policies also more inclusive.

Suggested Citation

  • Ms. Stefania Fabrizio & Davide Furceri & Mr. Rodrigo Garcia-Verdu & Ms. Grace B Li & Mrs. Sandra V Lizarazo Ruiz & Ms. Marina Mendes Tavares & Mr. Futoshi Narita & Mr. Adrian Peralta, 2017. "Macro-Structural Policies and Income Inequality in Low-Income Developing Countries," IMF Staff Discussion Notes 2017/001, International Monetary Fund.
  • Handle: RePEc:imf:imfsdn:2017/001
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    Citations

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    Cited by:

    1. Younes Zouhar & Jon Jellema & Nora Lustig & Mohamed Trabelsi, 2021. "Public Expenditure and Inclusive Growth - A Survey," Commitment to Equity (CEQ) Working Paper Series 109, Tulane University, Department of Economics.
    2. Nabamita Dutta & Lisa Giddings & Sanjukta Roy, 2019. "Can Greater Attention To Women'S Rights Help Address Income Inequality?," Contemporary Economic Policy, Western Economic Association International, vol. 37(3), pages 545-559, July.
    3. Sinha, Avik & Balsalobre-Lorente, Daniel & Zafar, Wasif & Saleem, Muhammad Mansoor, 2021. "Analyzing Global Inequality in Access to Energy: Developing Policy Framework by Inequality Decomposition," MPRA Paper 111061, University Library of Munich, Germany, revised 2021.
    4. Mr. Alexei P Kireyev & Andrei Leonidov, 2020. "Operationalizing Inclusive Growth: Per-Percentile Diagnostics to Inform Redistribution Policies," IMF Working Papers 2020/050, International Monetary Fund.

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