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A normal relationship Poverty, growth, and inequality (English)

Using a large cross-country income distribution dataset spanning close to 800 country-year observations from industrial and developing countries, the authors show that the size distribution of per capita income is well approximated empirically by a lognormal density. The 0 hypothesis that per capita income follows a lognormal distribution cannot be rejected-although the same hypothesis is unambiguously rejected when applied to per capita consumption. The authors show that lognormality of per capita income has important implications for the relative roles of income growth and inequality changes in poverty reduction. When poverty reduction is the overriding policy objective, poorer and relatively equal countries may be willing to tolerate modest increases in income inequality in exchange for faster growth-more so than richer and highly unequal countries.

Details

  • Author

    Lopez,J. Humberto, Serven,Luis

  • Document Date

    2006/01/01

  • Document Type

    Policy Research Working Paper

  • Report Number

    WPS3814

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    World,

  • Region

    The World Region,

  • Disclosure Date

    2010/07/01

  • Disclosure Status

    Disclosed

  • Doc Name

    A normal relationship ? Poverty, growth, and inequality

  • Keywords

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Citation

Lopez,J. Humberto Serven,Luis

A normal relationship Poverty, growth, and inequality (English). Policy, Research working paper ; no. WPS 3814 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/620771468150322825/A-normal-relationship-Poverty-growth-and-inequality