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Changing Income Inequality and Panel Income Changes

Author

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  • Duval Hernández, Robert

    (Open University of Cyprus)

  • Fields, Gary S.

    (Cornell University)

  • Jakubson, George H.

    (Cornell University)

Abstract

When economic growth (or economic decline) takes place, who benefits and who is hurt how much? The more traditional way of answering this question is to compare two or more comparable cross sections and gauge changing income inequality among countries or individuals. A newer way is to utilize data on a panel of countries or a panel of people and assess the pattern of panel income changes. How do these two approaches relate to one another? This paper shows, first, that it is possible to have all four combinations – rising or falling inequality and divergent or convergent panel income changes, and second, under what conditions, for various measures of rising/falling inequality and various measures of divergent/convergent income changes, each of the four possible combinations can arise.

Suggested Citation

  • Duval Hernández, Robert & Fields, Gary S. & Jakubson, George H., 2015. "Changing Income Inequality and Panel Income Changes," IZA Discussion Papers 9022, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp9022
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    References listed on IDEAS

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    1. Anthony F. Shorrocks & James E. Foster, 1987. "Transfer Sensitive Inequality Measures," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 54(3), pages 485-497.
    2. Cowell, Frank, 2011. "Measuring Inequality," OUP Catalogue, Oxford University Press, edition 3, number 9780199594047.
    3. Sen, Amartya, 1997. "On Economic Inequality," OUP Catalogue, Oxford University Press, number 9780198292975.
    4. Wodon, Quentin & Yitzhaki, Shlomo, 2006. "Convergence forward and backward?," Economics Letters, Elsevier, vol. 92(1), pages 47-51, July.
    5. A.B. Atkinson & F. Bourguignon (ed.), 2000. "Handbook of Income Distribution," Handbook of Income Distribution, Elsevier, edition 1, volume 1, number 1.
    6. Furceri, Davide, 2005. "[beta] and [sigma]-convergence: A mathematical relation of causality," Economics Letters, Elsevier, vol. 89(2), pages 212-215, November.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Changing Income Inequality and Panel Income Changes
      by maximorossi in NEP-LTV blog on 2015-06-04 18:51:27

    Citations

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    Cited by:

    1. Robert Duval‐Hernández & Gary S. Fields & George H. Jakubson, 2023. "Inequality And Panel Income Changes: Conditions For Possibilities And Impossibilities," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 64(1), pages 295-324, February.
    2. Michael Savage, 2016. "Poorest Made Poorer? Decomposing income losses at the bottom of the income distribution during the Great Recession," Papers WP528, Economic and Social Research Institute (ESRI).

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    More about this item

    Keywords

    income inequality; economic mobility;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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