[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/imf/imfwpa/1997-152.html
   My bibliography  Save this paper

How Macroeconomic Factors Affect Income Distribution: The Cross-Country Evidence

Author

Listed:
  • Mr. Michael Sarel
Abstract
This study develops a cross-section empirical framework to examine the relationship between the macroeconomic environment and trends in income distribution. The macroeconomic variables that are found to be associated with an improvement in income distribution are higher growth rate, higher income level, higher investment rate, real depreciation (especially for low-income countries), and improvement in terms of trade. The estimated significant effects of growth, income, and investment provide evidence that policies designed to promote investment and growth are likely also to contribute to an improvement in income distribution.

Suggested Citation

  • Mr. Michael Sarel, 1997. "How Macroeconomic Factors Affect Income Distribution: The Cross-Country Evidence," IMF Working Papers 1997/152, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1997/152
    as

    Download full text from publisher

    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=2407
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Bertola, Giuseppe, 1993. "Factor Shares and Savings in Endogenous Growth," American Economic Review, American Economic Association, vol. 83(5), pages 1184-1198, December.
    2. Panizza, Ugo, 2002. "Income Inequality and Economic Growth: Evidence from American Data," Journal of Economic Growth, Springer, vol. 7(1), pages 25-41, March.
    3. Card, David & Krueger, Alan B, 1994. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania," American Economic Review, American Economic Association, vol. 84(4), pages 772-793, September.
    4. DiNardo, John & Fortin, Nicole M & Lemieux, Thomas, 1996. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Econometrica, Econometric Society, vol. 64(5), pages 1001-1044, September.
    5. Deininger, Klaus & Squire, Lyn, 1998. "New ways of looking at old issues: inequality and growth," Journal of Development Economics, Elsevier, vol. 57(2), pages 259-287.
    6. Smith, G.D. & Wentworth, D. & Neaton, J.D. & Stamler, R. & Stamler, J., 1996. "Socioeconomic differentials in mortality risk among men screened for the multiple risk factor intervention trial: II. Black men," American Journal of Public Health, American Public Health Association, vol. 86(4), pages 497-504.
    7. Kanbur, Ravi, 2000. "Income distribution and development," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 13, pages 791-841, Elsevier.
    8. -, 1992. "Social equity and changing production patterns: an integrated approach," Libros de la CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 37866 edited by Eclac, May.
    9. Ranis, Gustav & Stewart, Frances & Ramirez, Alejandro, 2000. "Economic Growth and Human Development," World Development, Elsevier, vol. 28(2), pages 197-219, February.
    10. Litwin, Carol, 1998. "Trade and Income Distribution in Developing Countries," Working Papers in Economics 9, University of Gothenburg, Department of Economics.
    11. David E. Bloom & David Canning & Günther Fink, 2008. "Population Aging and Economic Growth," World Bank Publications - Books, The World Bank Group, number 28027.
    12. Deininger, Klaus & Squire, Lyn, 1996. "A New Data Set Measuring Income Inequality," The World Bank Economic Review, World Bank, vol. 10(3), pages 565-591, September.
    13. Krugman, Paul & Taylor, Lance, 1978. "Contractionary effects of devaluation," Journal of International Economics, Elsevier, vol. 8(3), pages 445-456, August.
    14. Smith, G.D. & Neaton, J.D. & Wentworth, D. & Stamler, R. & Stamler, J., 1996. "Socioeconomic differentials in mortality risk among men screened for the multiple risk factor intervention trial: I. White men," American Journal of Public Health, American Public Health Association, vol. 86(4), pages 486-496.
    15. Robert J. Waldmann, 1992. "Income Distribution and Infant Mortality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(4), pages 1283-1302.
    16. Timothy Besley & Robin Burgess, 2000. "Land Reform, Poverty Reduction, and Growth: Evidence from India," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(2), pages 389-430.
    17. Walter Galenson & Harvey Leibenstein, 1955. "Investment Criteria, Productivity, and Economic Development," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 69(3), pages 343-370.
    18. Oded Galor & Joseph Zeira, 1993. "Income Distribution and Macroeconomics," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 60(1), pages 35-52.
    19. Peter Gottschalk & Timothy M. Smeeding, 1997. "Cross-National Comparisons of Earnings and Income Inequality," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 633-687, June.
    20. Spilimbergo, Antonio & Londono, Juan Luis & Szekely, Miguel, 1999. "Income distribution, factor endowments, and trade openness," Journal of Development Economics, Elsevier, vol. 59(1), pages 77-101, June.
    21. Beyer, Harald & Rojas, Patricio & Vergara, Rodrigo, 1999. "Trade liberalization and wage inequality," Journal of Development Economics, Elsevier, vol. 59(1), pages 103-123, June.
    22. Khoo, L. & Dennis, B., 1999. "Income Inquality, Fertility Choice, and Economic Growth: Theory and Evidence," Papers 687, Harvard - Institute for International Development.
    23. Ranis, Gustav & Stewart, Frances, 1999. "V-Goods and the Role of the Urban Informal Sector in Development," Economic Development and Cultural Change, University of Chicago Press, vol. 47(2), pages 259-288, January.
    24. Robbins, Donald J., 1996. "Hos Hits Facts: Facts Win Evidence On Trade And Wages In The Developing World," Harvard Institute for International Development (HIID) Papers 294374, Harvard University, Kennedy School of Government.
    25. Kevin M. Murphy & Andrei Shleifer & Robert Vishny, 1989. "Income Distribution, Market Size, and Industrialization," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 104(3), pages 537-564.
    26. Ross, D. & Sabot, R. & Birdsall, N., 1995. "Inequality and Growth Reconsidered," Center for Development Economics 142, Department of Economics, Williams College.
    27. Deininger, Klaus & Squire, Lyn, 1996. "A New Data Set Measuring Income Inequality," The World Bank Economic Review, World Bank, vol. 10(3), pages 565-591, September.
    28. Eli Bekman & John Bound & Stephen Machin, 1998. "Implications of Skill-Biased Technological Change: International Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(4), pages 1245-1279.
    29. Birdsall, Nancy & Ross, David & Sabot, Richard, 1995. "Inequality and Growth Reconsidered: Lessons from East Asia," The World Bank Economic Review, World Bank, vol. 9(3), pages 477-508, September.
    30. Roland Bénabou, 1996. "Inequality and Growth," NBER Chapters, in: NBER Macroeconomics Annual 1996, Volume 11, pages 11-92, National Bureau of Economic Research, Inc.
    31. Martín Rama, 2001. "The Consequences of Doubling the Minimum Wage: The Case of Indonesia," ILR Review, Cornell University, ILR School, vol. 54(4), pages 864-881, July.
    32. Wolfgang F. Stolper & Paul A. Samuelson, 1941. "Protection and Real Wages," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 9(1), pages 58-73.
    33. Haddad, Lawrence & Kanbur, Ravi, 1990. "How Serious Is the Neglect of Intra-Household Inequality?," Economic Journal, Royal Economic Society, vol. 100(402), pages 866-881, September.
    34. Persson, Torsten & Tabellini, Guido, 1994. "Is Inequality Harmful for Growth?," American Economic Review, American Economic Association, vol. 84(3), pages 600-621, June.
    35. Cornia, Giovanni Andrea, "undated". "Liberalization, Globalization and Income Distribution," WIDER Working Papers 295482, United Nations University, World Institute for Development Economic Research (UNU-WIDER).
    36. Richard Dickens & Stephen Machin & Alan Manning & David Metcalf & Jonathan Wadsworth & Stephen Woodland, 1995. "The Effect Of Minimum Wages On Uk Agriculture," Journal of Agricultural Economics, Wiley Blackwell, vol. 46(1), pages 1-19, January.
    37. Branko Milanovic, 1999. "Explaining the increase in inequality during transition," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(2), pages 299-341, July.
    38. Dorosh, Paul & Valdés, Alberto, 1990. "Effects of exchange rate and trade policies on agriculture in Pakistan:," Research reports 84, International Food Policy Research Institute (IFPRI).
    39. Roberto Perotti, 1993. "Political Equilibrium, Income Distribution, and Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 60(4), pages 755-776.
    40. Davis, Donald, 1996. "Trade Liberalization And Income Distribution," Harvard Institute for International Development (HIID) Papers 294371, Harvard University, Kennedy School of Government.
    41. David Neumark & William Wascher, 1991. "Evidence on Employment Effects of Minimum Wages and Subminimum Wage Provisions From Panel Data on State Minimum Wage Laws," NBER Working Papers 3859, National Bureau of Economic Research, Inc.
    42. Anderson, Dennis, 1982. "Small industry in developing countries: A discussion of issues," World Development, Elsevier, vol. 10(11), pages 913-948, November.
    43. Frances Stewart, "undated". "The Root Causes of Conflict: Some Conclusions," QEH Working Papers qehwps16, Queen Elizabeth House, University of Oxford.
    44. Patricia Jones, 1998. "The impact of minimum wage legislation in developing countries where coverage is incomplete," CSAE Working Paper Series 1998-02, Centre for the Study of African Economies, University of Oxford.
    45. Donald R. Davis, 1996. "Trade Liberalization and Income Distribution," Harvard Institute of Economic Research Working Papers 1769, Harvard - Institute of Economic Research.
    46. Kanbur, Ravi & Lustig, Nora, 1999. "Why is Inequality Back on the Agenda?," Working Papers 127690, Cornell University, Department of Applied Economics and Management.
    47. Lipton, Michael, 1993. "Land reform as commenced business: The evidence against stopping," World Development, Elsevier, vol. 21(4), pages 641-657, April.
    48. -, 1992. "Social equity and changing production patterns: an integrated approach," Libros y Documentos Institucionales, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 37866 edited by Eclac.
    49. Shah, Anwar & Whalley, John, 1990. "An alternative view of tax incidence analysis for developing countries," Policy Research Working Paper Series 462, The World Bank.
    50. Coen N. Teulings, 1998. "The Contribution of Minimum Wages to Increasing Wage Inequality," Tinbergen Institute Discussion Papers 98-093/3, Tinbergen Institute.
    51. B, Felipe & M, Rodrigo, 1997. "Income Distribution Investment, And Growth," Harvard Institute for International Development (HIID) Papers 294416, Harvard University, Kennedy School of Government.
    52. Lustig, N. & Mcleod, D., 1996. "Minimum Wages and Poverty in Developing Countries : Some Empirical Evidence," Papers 125, Brookings Institution - Working Papers.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Batuo, Michael E. & Kararach, George & Malki, Issam, 2022. "The dynamics of income inequality in Africa: An empirical investigation on the role of macroeconomic and institutional forces," World Development, Elsevier, vol. 157(C).
    2. Pablo García S. & Camilo Pérez N., 2017. "Desigualdad, inflación, ciclos y crisis en Chile," Estudios de Economia, University of Chile, Department of Economics, vol. 44(2 Year 20), pages 185-221, December.
    3. Tristan Canare & Jamil Paolo Francisco & Rose Ann Camille Caliso, 2020. "Decentralization and Income Inequality in a Panel and Cross‐Section of Countries," Journal of International Development, John Wiley & Sons, Ltd., vol. 32(4), pages 543-579, May.
    4. Francisco J. Oliver-Márquez & Almudena Guarnido-Rueda & Ignacio Amate-Fortes & Diego Martínez-Navarro, 2022. "Is Income Inequality Influenced by Financial Knowledge? A Macroeconomic and Longitudinal Analysis," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(4), pages 3050-3075, December.
    5. Batuo E. Michael & George Kararach & Issam Malki, 2021. "Working Paper 353 - Inequality and the role of macroeconomic and institutional forces in Africa," Working Paper Series 2479, African Development Bank.
    6. Margaret S. McMillan & Alix Peterson Zwane & Nava Ashraf, 2007. "My Policies or Yours: Does OECD Support for Agriculture Increase Poverty in Developing Countries?," NBER Chapters, in: Globalization and Poverty, pages 183-240, National Bureau of Economic Research, Inc.
    7. Nguyen, Trang T.T., 2016. "Tax administration resources and Income inequality," MPRA Paper 74820, University Library of Munich, Germany.
    8. José De Gregorio & Jong-Wha Lee, 1999. "Education and Income Distribution: New Evidence from Cross-country Data," Documentos de Trabajo 55, Centro de Economía Aplicada, Universidad de Chile.
    9. Ali Abdel Gadir Ali, "undated". "Can the Sudan Reduce Poverty by Half by the Year 2015?," API-Working Paper Series 0304, Arab Planning Institute - Kuwait, Information Center.
    10. Kevin Sylwester, 2003. "Enrolment in Higher Education and Changes in Income Inequality," Bulletin of Economic Research, Wiley Blackwell, vol. 55(3), pages 249-262, July.
    11. Ali A. Ali & Ibrahim A. Elbadawi, 1999. "Inequality and the Dynamics of Poverty and Growth," CID Working Papers 32, Center for International Development at Harvard University.
    12. José De Gregorio & Jong–Wha Lee, 2002. "Education and Income Inequality: New Evidence From Cross‐Country Data," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 48(3), pages 395-416, September.
    13. Frances Stewart, 2003. "Income distribution and development," Chapters, in: John Toye (ed.), Trade and Development, chapter 10, Edward Elgar Publishing.
    14. Mr. Vassili Prokopenko & Mr. Paul Holden, 2001. "Financial Development and Poverty Alleviation: Issues and Policy Implications for Developing and Transition Countries," IMF Working Papers 2001/160, International Monetary Fund.
    15. Mehmet Balcilar & Shinhye Chang & Rangan Gupta & Stephen M. Miller, 2018. "The relationship between the inflation rate and inequality across U.S. states: a semiparametric approach," Quality & Quantity: International Journal of Methodology, Springer, vol. 52(5), pages 2413-2425, September.
    16. Samuel Adams & Berhanu Mengistu, 2008. "Privatization, Governance and Economic Development in Developing Countries," Journal of Developing Societies, , vol. 24(4), pages 415-438, October.
    17. Ali A Ali & Ibrahim A. Elbadawi, 1999. "Inequality and the Dynamics of Poverty and Growth," CID Working Papers 32A, Center for International Development at Harvard University.
    18. Bucevska Vesna, 2019. "Determinants of Income Inequality in EU Candidate Countries: A Panel Analysis," Economic Themes, Sciendo, vol. 57(4), pages 397-413, December.
    19. Frances Stewart, "undated". "Adjustment and Poverty in Asia: Old Solutions and New Problems -," QEH Working Papers qehwps20, Queen Elizabeth House, University of Oxford.
    20. Cyn-Young Park & Rogelio Mercado, 2018. "Financial Inclusion, Poverty, And Income Inequality," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 63(01), pages 185-206, March.
    21. Edgar Pardo-Beltrán, 2002. "Effects of Income Distribution on Growth," SCEPA working paper series. 2002-16, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Frances Stewart, 2003. "Income distribution and development," Chapters, in: John Toye (ed.), Trade and Development, chapter 10, Edward Elgar Publishing.
    2. Christophe Ehrhart, 2009. "The effects of inequality on growth: a survey of the theoretical and empirical literature," Working Papers 107, ECINEQ, Society for the Study of Economic Inequality.
    3. Adalgiso Amendola & Roberto Dell�Anno, 2014. "Income inequality and economic growth: an empirical investigation in Mediterranean countries," RIEDS - Rivista Italiana di Economia, Demografia e Statistica - The Italian Journal of Economic, Demographic and Statistical Studies, SIEDS Societa' Italiana di Economia Demografia e Statistica, vol. 68(2), pages 35-58, April-Jun.
    4. Marrero, Gustavo A. & Rodríguez, Juan G., 2013. "Inequality of opportunity and growth," Journal of Development Economics, Elsevier, vol. 104(C), pages 107-122.
    5. Roberto Dell'Anno & Adalgiso Amendola, 2015. "Social Exclusion and Economic Growth: An Empirical Investigation in European Economies," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 61(2), pages 274-301, June.
    6. Nobuhiro Mizuno & Katsuyuki Naito & Ryosuke Okazawa, 2017. "Inequality, extractive institutions, and growth in nondemocratic regimes," Public Choice, Springer, vol. 170(1), pages 115-142, January.
    7. Martin Baur, 2010. "Politics and Income Distribution," Chapters, in: Neri Salvadori (ed.), Institutional and Social Dynamics of Growth and Distribution, chapter 3, Edward Elgar Publishing.
    8. Adelaide Duarte & Marta Simões, 2009. "Channels of transmission of inequality to growth: A survey of the theory and evidence from a Portuguese perspective," GEMF Working Papers 2009-07, GEMF, Faculty of Economics, University of Coimbra.
    9. Shinhye Chang & Rangan Gupta & Stephen M. Miller, 2018. "Causality Between Per Capita Real GDP and Income Inequality in the U.S.: Evidence from a Wavelet Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 135(1), pages 269-289, January.
    10. Daniele Checchi, 2001. "Education, Inequality and Income Inequality," STICERD - Distributional Analysis Research Programme Papers 52, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    11. Amparo Castelló-Climent, 2004. "A Reassessment Of The Relationship Between Inequality And Growth: What Human Capital Inequality Data Say?," Working Papers. Serie EC 2004-15, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    12. Ademola Obafemi Young, 2019. "Growth Impacts of Income Inequality: Empirical Evidence From Nigeria," Research in World Economy, Research in World Economy, Sciedu Press, vol. 10(3), pages 226-262, December.
    13. Marta Simões & João Andrade & Adelaide Duarte, 2013. "A regional perspective on inequality and growth in Portugal using panel cointegration analysis," International Economics and Economic Policy, Springer, vol. 10(3), pages 427-451, September.
    14. Easterly, William, 2007. "Inequality does cause underdevelopment: Insights from a new instrument," Journal of Development Economics, Elsevier, vol. 84(2), pages 755-776, November.
    15. Thomas Leoni & Wolfgang Pollan, 2003. "The Impact of Inequality on Economic Growth," WIFO Working Papers 211, WIFO.
    16. Amparo Castelló-Climent, 2010. "Inequality and growth in advanced economies: an empirical investigation," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 8(3), pages 293-321, September.
    17. Cristiano Perugini & Gaetano Martino, 2008. "Income Inequality Within European Regions: Determinants And Effects On Growth," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 54(3), pages 373-406, September.
    18. repec:pru:wpaper:21 is not listed on IDEAS
    19. Martin Ravallion, 2012. "Why Don't We See Poverty Convergence?," American Economic Review, American Economic Association, vol. 102(1), pages 504-523, February.
    20. Enea Baselgia & Reto Foellmi, 2022. "Inequality and growth: a review on a great open debate in economics," WIDER Working Paper Series wp-2022-5, World Institute for Development Economic Research (UNU-WIDER).
    21. Julio Huato, 2023. "Inequality and Growth: A Two-Player Dynamic Game with Production and Appropriation," Papers 2304.01855, arXiv.org.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:1997/152. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Akshay Modi (email available below). General contact details of provider: https://edirc.repec.org/data/imfffus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.