National Income and Its Distribution

Author/Editor:

Era Dabla-Norris ; Mark Gradstein ; Markus Bruckner

Publication Date:

June 11, 2014

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Does the distribution of income within a country become more equal as it grows richer? This paper uses plausibly exogenous variations in trade-weighted world income and international oil price shocks as instruments for within-country variations in countries real GDP per capita to examine this issue for a large sample of advanced and developing countries. Our findings indicate that increases in national income have a significant moderating effect on income inequality: a one percent increase in real GDP per capita, on average, reduces the Gini coefficient by around 0.08 percentage points, a result that is robust across income levels, different time horizons, and alternative estimation techniques. From a policy perspective, our results suggest that education policies that promote equity and help individuals continue on to higher levels of education could help reduce income inequality.

Series:

Working Paper No. 14/101

Subject(s):

English

Publication Date:

June 11, 2014

ISBN/ISSN:

9781498347815/1018-5941

Stock No:

WPIEA2014101

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

44

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