Distributions in Motion : Economic Growth, Inequality, and Poverty Dynamics
The joint determination of aggregate economic growth and distributional change has been studied empirically from at least three different perspectives. A macroeconomic approach that relies on cross-country data on poverty, inequality, and growth rates has generated some interesting stylized facts about the correlations between these variables, but has not shed much light on the underlying determinants. "Meso-" and microeconomic approaches have fared somewhat better. The microeconomic approach, in particular, builds on the observation that growth, changes in poverty, and changes in inequality are simply different aggregations of information on the incidence of economic growth along the income distribution. This paper reviews the evolution of attempts to understand the nature of growth incidence curves, from the statistical decompositions associated with generalizations of the Oaxaca-Blinder method, to more recent efforts to generate "economically consistent" counterfactuals, drawing on structural, reduced-form, and computable general equilibrium models.
Summary: | The joint determination of aggregate
economic growth and distributional change has been studied
empirically from at least three different perspectives. A
macroeconomic approach that relies on cross-country data on
poverty, inequality, and growth rates has generated some
interesting stylized facts about the correlations between
these variables, but has not shed much light on the
underlying determinants. "Meso-" and microeconomic
approaches have fared somewhat better. The microeconomic
approach, in particular, builds on the observation that
growth, changes in poverty, and changes in inequality are
simply different aggregations of information on the
incidence of economic growth along the income distribution.
This paper reviews the evolution of attempts to understand
the nature of growth incidence curves, from the statistical
decompositions associated with generalizations of the
Oaxaca-Blinder method, to more recent efforts to generate
"economically consistent" counterfactuals, drawing
on structural, reduced-form, and computable general
equilibrium models. |
---|