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Inequality Dynamics: Evidence from Some European Countries

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  • Matteo Iacoviello

Abstract

Using year-by-year measures of income distribution provided by the LIS dataset for eight continental Europe countries, this paper considers the recent literature on income inequality and growth to test the following propositions: does inequality converge during the process of economic growth? What are the variables that can influence this process? Are there any joint dynamics in income inequality and income levels, and which variable causes the other? On the one hand, the results seem to show mean-reversion in Gini coefficients in the analyzed sample, not only when absolute convergence is taken into account, but also when other determinants of movements in income inequality, suggested by the literature, are added to the base regression. On the other hand, they point out that shocks to income can yield interesting short run dynamics in income distribution, whereas the reverse link, from inequality to income, is not well supported by the specification.

Suggested Citation

  • Matteo Iacoviello, 1998. "Inequality Dynamics: Evidence from Some European Countries," LIS Working papers 191, LIS Cross-National Data Center in Luxembourg.
    • Handle: RePEc:lis:liswps:191
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    References listed on IDEAS

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    1. Alesina, Alberto & Perotti, Roberto, 1994. "The Political Economy of Growth: A Critical Survey of the Recent Literature," The World Bank Economic Review, World Bank, vol. 8(3), pages 351-371, September.
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    8. Tamura, Robert, 1991. "Income Convergence in an Endogenous Growth Model," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 522-540, June.
    9. Adelman, Irma & Robinson, Sherman, 1989. "Income distribution and development," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 2, chapter 19, pages 949-1003, Elsevier.
    10. Nazrul Islam, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(4), pages 1127-1170.
    11. Eichengreen, Barry, 1994. "Institutions and Economic Growth: Europe After World War II," CEPR Discussion Papers 973, C.E.P.R. Discussion Papers.
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    Cited by:

    1. Heshmati, Almas, 2004. "Regional Income Inequality in Selected Large Countries," IZA Discussion Papers 1307, Institute of Labor Economics (IZA).

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