Date post: | 18-Feb-2018 |
Category: |
Documents |
Upload: | kireeti-mara |
View: | 217 times |
Download: | 0 times |
7/23/2019 DW Levan Growth
http://slidepdf.com/reader/full/dw-levan-growth 1/30
Inequality and Growth
RevisitedRobert J. Barro
Presentation prepared by
Levan Bzhalava
WARSAW UNIVERSITY
7/23/2019 DW Levan Growth
http://slidepdf.com/reader/full/dw-levan-growth 2/30
Outline
I. Measures of incoe inequality !Gini coe"cient#II. $uznets hypothesis
III. Previous %tudy !&'''#
I(. )he present analysis !January &''*#
(. Incoe+Inequality ,ata
(I. -stiated $uznets urves
(II. Inequality as a ,eterinant of -conoic Growth
(III. oncludin/ 0bservations
I1. Is Inequality 2arful for Growth3
7/23/2019 DW Levan Growth
http://slidepdf.com/reader/full/dw-levan-growth 3/30
I. Measures of incomeinequality
Gini coefcient + ost
proinently used as aeasure of inequality ofincoe distribution or
inequality of wealthdistribution. It is de4ned as aratio with values between 'and 5.
Gini 6 1 perfectinequality
Gini 6 0 perfect equality
source: www.wikimedia.org
7/23/2019 DW Levan Growth
http://slidepdf.com/reader/full/dw-levan-growth 4/30
Gini Map &''*
source: www.wikimedia.org
7/23/2019 DW Levan Growth
http://slidepdf.com/reader/full/dw-levan-growth 5/30
II. Kuznets hypothesis
• -conoic inequality increases over tie7 then ata critical point it be/ins to decrease
7/23/2019 DW Levan Growth
http://slidepdf.com/reader/full/dw-levan-growth 6/30
Kuznets Curve
• 8hy in poor countries econoic/rowth increases inequality and inrich countries econoic /rowth
decreases inequality3
8hy3
7/23/2019 DW Levan Growth
http://slidepdf.com/reader/full/dw-levan-growth 7/30
Kuznets Curve
8hy3
• -conoic developent+includin/ shifts froa/riculture to industry and services and the
adoption of new technolo/ies+initiallybene4ts ainly a inority of the population.
• 9s the new ethods of production becoewidespread7 the bene4ts fro econoic
developent are shared ore evenly7 andhi/her per capita G,P tends to reduceinequality.
7/23/2019 DW Levan Growth
http://slidepdf.com/reader/full/dw-levan-growth 8/30
III. Previous Study!arro"000#
Inequality and $ro%th• )he e:ect of G,P on inequality inverse+;+shaped !as the $uznets curve#.
• %tartin/ fro a low value G,P + inequality
• Relation <attened out at su"ciently hi/h per capita G,P
• =urther increases tended to reduce inequality.
• Previous results con4red the presence ofthe $uznets curve across countries and
over tie. !2owever7 the curve did not e>plain a lar/e fraction of theobserved variation in incoe inequality#
7/23/2019 DW Levan Growth
http://slidepdf.com/reader/full/dw-levan-growth 9/30
I&. 'he present analysis
• ;pdates the previous cross+countryresearch
Motives?
• Globalization
• International trade
7/23/2019 DW Levan Growth
http://slidepdf.com/reader/full/dw-levan-growth 10/30
&. Income(Inequality)ata
• Previous study +8orld Ban@As ,einin/er and%quire !5C# data set
• )he present wor@ D 8orld Incoe Inequality
,atabase fro May &''E copiled by the;nited Fations !;F#. !Better international inforation on
incoe inequality#
'he num*er of country o*servations+
,- + 5C's
+ 5E's7 /0 + 5*'s7
1"0 + 5's7
/" + &'''s
7/23/2019 DW Levan Growth
http://slidepdf.com/reader/full/dw-levan-growth 11/30
Incoe inequality for worldavera/es 5C's + &'''s
The table considers three standard measures of income inequality: the Gini
coefficient; the share of income going to the lowest quintile of the income
distribution and; the share going to the highest quintile.
7/23/2019 DW Levan Growth
http://slidepdf.com/reader/full/dw-levan-growth 12/30
7/23/2019 DW Levan Growth
http://slidepdf.com/reader/full/dw-levan-growth 13/30
&I. stimated KuznetsCurves
7/23/2019 DW Levan Growth
http://slidepdf.com/reader/full/dw-levan-growth 14/30
7/23/2019 DW Levan Growth
http://slidepdf.com/reader/full/dw-levan-growth 15/30
7/23/2019 DW Levan Growth
http://slidepdf.com/reader/full/dw-levan-growth 16/30
-stiated $uznets urves
-:ect on the Gini coe"cient
• Positive fro lo/ !per capita G,P#
• Fe/ative fro the square of the lo/ !per
capita G,P#
• Positive fro openness variable!ore trade creates ore incoe inequality#
7/23/2019 DW Levan Growth
http://slidepdf.com/reader/full/dw-levan-growth 17/30
&II. Inequality as a)eterminant of conomic
$ro%thCross-country growth regressions
7/23/2019 DW Levan Growth
http://slidepdf.com/reader/full/dw-levan-growth 18/30
7/23/2019 DW Levan Growth
http://slidepdf.com/reader/full/dw-levan-growth 19/30
Inequality as a ,eterinantof -conoic Growth
• )he Gini variable is si/ni4cantly ne/ative.
• )he ipact of inequality on /rowth is ostne/ative for the poorest countries + the
si/ni4cantly positive coe"cient ofinteraction ter
• 9t hi/her per capita G,P e:ect ofinequality on /rowth ay becoe positive.
“Inequality is bad or ro!t" in #oorcountries and ood in ric" countries$
7/23/2019 DW Levan Growth
http://slidepdf.com/reader/full/dw-levan-growth 20/30
7/23/2019 DW Levan Growth
http://slidepdf.com/reader/full/dw-levan-growth 21/30
7/23/2019 DW Levan Growth
http://slidepdf.com/reader/full/dw-levan-growth 22/30
,e Gre/orio and Lee !&''#
• Incoe inequality a:ects econoic /rowthindirectly by in<uencin/ other deterinants of/rowth
• Inequality raises fertility and lower secondaryschool enrollent and the rule of law
Greater inco%e inequality !ould lo!erecono%ic ro!t"
Not in De Gregorio and Lee (2004)• 2i/her incoe inequality leads to lower
life e>pectancy
7/23/2019 DW Levan Growth
http://slidepdf.com/reader/full/dw-levan-growth 23/30
&III. ConcludinO*servations
• -:ects on inequality is positive frointernational openness.
But enhanced trade can lower poverty even if incoe inequalityrises.
• Fe/ative e:ect fro incoe inequality oneconoic /rowth
7/23/2019 DW Levan Growth
http://slidepdf.com/reader/full/dw-levan-growth 24/30
&III. ConcludinO*servations
• -:ect of inequality on /rowth diinishesas per capita G,P rises and ay bepositive for the richest countries.
• Growth is encoura/ed by /reaterinternational openness7 hi/her lifee>pectancy7 better rule of law7 and lowerfertility.
7/23/2019 DW Levan Growth
http://slidepdf.com/reader/full/dw-levan-growth 25/30
IX. Is Inequality Harmful
for Growth?
7/23/2019 DW Levan Growth
http://slidepdf.com/reader/full/dw-levan-growth 26/30
8hy do we care aboutinequality3
• %ociopolitical Instability In poor countries hi/h Inequality /enerates sociopolitical
con<ict that are detriental for /rowth
• Incoe redistribution and redit+ar@etfailures
More credit+constrained people eans lower investent and/rowth
In case of hi/h inequality redistribution is necessary
2i/h redistribution ay reduce incentives to accuulate + iply
less /rowth
7/23/2019 DW Levan Growth
http://slidepdf.com/reader/full/dw-levan-growth 27/30
%ociopolitical Instability
7/23/2019 DW Levan Growth
http://slidepdf.com/reader/full/dw-levan-growth 28/30
HGood and Bad Inequalities
• Good inequality increase incentivesfor innovation7 entrepreneurship andeconoic /rowth.
• Bad inequality creates obstacles forpoor people to receive education andto access credit7 that ipedienteconoic developent
7/23/2019 DW Levan Growth
http://slidepdf.com/reader/full/dw-levan-growth 29/30
Supplementary sources
• Martin Ravallion !&''E#7 H-conoic Growth is Fot an 9ntipoverty Policy7,evelopent Research Group 8orld Ban@. onference? H)a@in/ 9ction for the8orldAs Poor and 2un/ry Peoplewww.ifpri.org/2020chinaconference/day/presentations/!-2"#$a%a&&ion.ppt
• Lina )olvaisaite7 $atharina Maier7 )aara )schentscher7 HIncoe Inequality and,evelopent &ehre.wiwi.hu-'er&in.de/rofessuren/%w&/fw/&ehre/ws00*/.../inco+e"ine,ua&ity"and"de%e&op+ent"
se+inar"20""200.p• Maria 9na Lu/o7 HInequality and 2uan ,evelopent ;niversity of 0>ford
hdr.undp.org/en/+edia/ne,ua&ity20and20u+an20De%e&op+ent20
• Inequality Growth
persona&.rhu&.ac.u1/u&te/0/3C/ine,ua&ityGrowth&ecture5.ppt
• 2uberto Lopez Hro poor growth6 7 re%iew of what we 1now (8and of what we
don9t) )he 8orld Ban@7 PRMPR + www.nade&.eth:.ch/&ehre/ppg"re%iew.pdf• Dr . aight + ;200. nco+e ne,ua&ity . 3con 2/22. 3cono+ic De%e&op+ent .
www.chaight.co+/<1202203220and202220nco+e20... -
• Gini Map + source6 www.wi1i+edia.org
• Photos sources? www.fotosearch.co+/photos-i+ages
7/23/2019 DW Levan Growth
http://slidepdf.com/reader/full/dw-levan-growth 30/30
Questions?