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The Ricardian Vice: Why Sala-i-Martin’s calculations of world income inequality are wrong

  • Branko Milanovic

    (World Bank)

The paper discusses recent world income inequality calculations by Sala- i-Martin. It shows that the two main problems with which the author had to grapple (too few data to derive countries’ income distributions, and sparseness of such data in time) are not solved in a satisfactory fashion. They, and several other simplifying assumptions, make Sala-i- Martin results very dubious. We argue that Sala-i-Martin has ended up by producing a population-weighted inter-national distribution of income augmented by a constant shift parameter and not a distribution of income among world citizens.

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File URL: http://econwpa.repec.org/eps/hew/papers/0305/0305003.pdf
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Paper provided by EconWPA in its series HEW with number 0305003.

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Date of creation: 09 May 2003
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Handle: RePEc:wpa:wuwphe:0305003
Note: Type of Document - pdf; prepared on IBM PC - ; to print on HP;
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  1. Sharun Mukand & Dani Rodrik, 2002. "In Search of the Holy Grail: Policy Convergence, Experimentation, and Economic Performance," NBER Working Papers 9134, National Bureau of Economic Research, Inc.
  2. Xavier Sala-i-Martin, 2002. "The disturbing "rise" of global income inequality," Discussion Papers 0102-44, Columbia University, Department of Economics.
  3. Quah, Danny T, 1997. " Empirics for Growth and Distribution: Stratification, Polarization, and Convergence Clubs," Journal of Economic Growth, Springer, vol. 2(1), pages 27-59, March.
  4. Quah, Danny, 2002. "One Third of the World's Growth and Inequality," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  5. Steve Dowrick & Muhammad Akmal, 2005. "Contradictory Trends In Global Income Inequality: A Tale Of Two Biases ," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 51(2), pages 201-229, 06.
  6. Branko milanovic, 2003. "True world income distribution, 1988 and 1993: First calculation based on household surveys alo," HEW 0305002, EconWPA.
  7. T. Paul Schultz, 1998. "Inequality in the Distribution of Personal Income in the World: How it is Changing and Why," Working Papers 784, Economic Growth Center, Yale University.
  8. Chotikapanich, Duangkamon & Valenzuela, Rebecca & Rao, D S Prasada, 1997. "Global and Regional Inequality in the Distribution of Income: Estimation with Limited and Incomplete Data," Empirical Economics, Springer, vol. 22(4), pages 533-46.
  9. Jordi Gali & Tommaso Monacelli, 2002. "Monetary Policy and Exchange Rate Volatility in a Small Open Economy," NBER Working Papers 8905, National Bureau of Economic Research, Inc.
  10. T. Paul Schultz, 1998. "Inequality in the distribution of personal income in the world: How it is changing and why," Journal of Population Economics, Springer, vol. 11(3), pages 307-344.
  11. Danny Quah, 2002. "One third of the world's growth and inequality," LSE Research Online Documents on Economics 2019, London School of Economics and Political Science, LSE Library.
  12. Quah, Danny, 2002. "One Third of the World's Growth and Inequality," CEPR Discussion Papers 3316, C.E.P.R. Discussion Papers.
  13. Danny Quah, 2002. "One Third of the Worlds Growth and Inequality," CEP Discussion Papers dp0535, Centre for Economic Performance, LSE.
  14. Milanovic, Branko, 1999. "True world income distribution, 1988 and 1993 - first calculations, based on household surveys alone," Policy Research Working Paper Series 2244, The World Bank.
  15. Quah, Danny, 1997. "Empirics for Growth and Distribution: Stratification, Polarization, and Convergence Clubs," CEPR Discussion Papers 1586, C.E.P.R. Discussion Papers.
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