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

Author

Listed:
  • Branko Milanovic

    (World Bank)

Abstract

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.

Suggested Citation

  • Branko Milanovic, 2003. "The Ricardian Vice: Why Sala-i-Martin’s calculations of world income inequality are wrong," HEW 0305003, EconWPA.
  • Handle: RePEc:wpa:wuwphe:0305003
    Note: Type of Document - pdf; prepared on IBM PC - ; to print on HP;
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/hew/papers/0305/0305003.pdf
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    References listed on IDEAS

    as
    1. Branko Milanovic, 2002. "True World Income Distribution, 1988 and 1993: First Calculation Based on Household Surveys Alone," Economic Journal, Royal Economic Society, vol. 112(476), pages 51-92, January.
    2. Quah, Danny, 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.
    3. 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;European Society for Population Economics, vol. 11(3), pages 307-344.
    4. Sharun W. Mukand & Dani Rodrik, 2005. "In Search of the Holy Grail: Policy Convergence, Experimentation, and Economic Performance," American Economic Review, American Economic Association, vol. 95(1), pages 374-383, March.
    5. 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 533-546.
    6. Jordi Galí & Tommaso Monacelli, 2005. "Monetary Policy and Exchange Rate Volatility in a Small Open Economy," Review of Economic Studies, Oxford University Press, vol. 72(3), pages 707-734.
    7. Quah, Danny, 1997. "Empirics for Growth and Distribution: Stratification, Polarization, and Convergence Clubs," CEPR Discussion Papers 1586, C.E.P.R. Discussion Papers.
    8. Quah, Danny, 2002. "One Third of the World's Growth and Inequality," WIDER Working Paper Series 038, World Institute for Development Economic Research (UNU-WIDER).
    9. Quah, Danny, 2002. "One Third of the World's Growth and Inequality," CEPR Discussion Papers 3316, C.E.P.R. Discussion Papers.
    10. Danny Quah, 2002. "One Third of the Worlds Growth and Inequality," CEP Discussion Papers dp0535, Centre for Economic Performance, LSE.
    11. Xavier Sala-i-Martin, 2001. "The disturbing 'rise' of global income inequality," Economics Working Papers 616, Department of Economics and Business, Universitat Pompeu Fabra, revised Apr 2002.
    12. 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.
    13. 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, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. La inequidad condenable: ´Dime donde naces…´
      by juanhmex in Pasado y Presente de la Economia Mundial on 2013-02-19 17:55:19

    Citations

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    Cited by:

    1. Branko Milanovic, 2005. "Global Income Inequality: What It Is And Why It Matters?," HEW 0512001, EconWPA.
    2. Capeau, Bart & Decoster, Andre, 2004. "The Rise or Fall of World Inequality: A Spurious Controversy?," WIDER Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
    3. Branko Milanovic & Lyn Squire, 2007. "Does Tariff Liberalization Increase Wage Inequality? Some Empirical Evidence," NBER Chapters,in: Globalization and Poverty, pages 143-182 National Bureau of Economic Research, Inc.
    4. James Galbraith, 2009. "Inequality, unemployment and growth: New measures for old controversies," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 7(2), pages 189-206, June.
    5. Yin Zhang & Guanghua Wan, 2006. "Globalization and the Urban Poor in China," Dundee Discussion Papers in Economics 196, Economic Studies, University of Dundee.
    6. Ricardo Fuentes, 2005. "Poverty, Pro-Poor Growth and Simulated Inequality Reduction," Human Development Occasional Papers (1992-2007) HDOCPA-2005-11, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).
    7. Chotikapanich, Duangkamon & Griffiths, William E. & Rao, D. S. Prasada, 2007. "Estimating and Combining National Income Distributions Using Limited Data," Journal of Business & Economic Statistics, American Statistical Association, vol. 25, pages 97-109, January.
    8. Prados de la Escosura, Leandro, 2007. "International inequality and polarization in living standards, 1870-2000 : evidence from the Western World," IFCS - Working Papers in Economic History.WH wp07-05, Universidad Carlos III de Madrid. Instituto Figuerola.
    9. Yunker, James A., 2004. "Could a Global Marshall Plan be Successful? An Investigation Using The WEEP Simulation Model," World Development, Elsevier, vol. 32(7), pages 1109-1137, July.
    10. Francisco Rodriguez & Arjun Jayadev, 2010. "The Declining Labor Share of Income," Human Development Research Papers (2009 to present) HDRP-2010-36, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).
    11. Goerlich, Francisco José & Mas, Matilde, 2004. "Distribución personal de la renta en España. 1973-2001
      [Personal income distribution in Spain. 1973-2001]
      ," MPRA Paper 15830, University Library of Munich, Germany, revised 2004.
    12. Nissanke, Machiko & Thorbecke, Erik, 2005. "Channels and Policy Debate in the Globalization-Inequality-Poverty Nexus," WIDER Working Paper Series DP2005/08, World Institute for Development Economic Research (UNU-WIDER).

    More about this item

    Keywords

    income inequality; world; globalization;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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