Inequality in Good and Bad Times: A Cross-Country Approach
IMF Working Papers, January 22, 2019
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- Inequality in Good and Bad Times: A Cross-Country Approach
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Bibliographic details
- Authors: Burcu Hacibedel, Pierre Mandon, Priscilla S Muthoora, Nathalie Pouokam
- Published: January 22, 2019
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484392911.001
Core findings
- The paper provides evidence of a strong relationship between the short-term dynamics of growth and inequality in developing economies.
- Reductions in inequality during growth upswings are largely reversed during growth slowdowns.
- Mediation analysis identifies unemployment, and youth unemployment especially, as the main channel through which fluctuations in growth affect future dynamics in inequality.
- These findings imply that both the quality of jobs created and labor market policies are important to ensure that growth outcomes are conducive to inequality reduction.
Methodology
- Uses a new methodology: mediation analysis.
- Focuses on short-term dynamics linking growth episodes (upswings and slowdowns) to subsequent inequality outcomes.
- Identifies channels (with emphasis on unemployment and youth unemployment) through which growth fluctuations propagate to inequality.
Policy implications and recommendations
- Prioritize job quality in growth strategies so that employment gains translate into durable inequality reductions.
- Strengthen labor market policies aimed at reducing overall unemployment and youth unemployment to mitigate reversals in inequality during growth slowdowns.
- Design social and labor policies considering the cyclical nature of growth-inequality dynamics to prevent gains during upswings from being reversed.
Subjects and keywords (as listed)
- Subjects: Consumption, Income distribution, Income inequality, Labor, National accounts, Personal income, Unemployment
- Keywords: Caribbean, confidence interval, Consumption, dependent variable, Developing countries, East Asia, Europe, explanatory variable, Global, Growth, Growth conditions, growth rate, Income distribution, Income inequality, Inequality, mediation analysis, Middle East, Personal income, structural equation, Unemployment, unemployment channel, WP, youth unemployment
© Burcu Hacibedel, Pierre Mandon, Priscilla S Muthoora, and Nathalie Pouokam, January 22, 2019; IMF Working Papers 2019, 020. DOI: https://doi.org/10.5089/9781484392911.001 (accessed 9/10/2026). Pages: 41. ISBN: 9781484392911. ISSN: 1018-5941.
Content in this bundle
- Inequality in Good and Bad Times: A Cross-Country Approach, WP/19/20, January 2019