Abstract
The distributional incidence of growth is generally analyzed by comparing the quantiles of the pre- and post-growth income distribution—e.g. the so-called Growth Incidence Curves. Such an approach based on an implicit re-ranking of individual incomes ignores income mobility by assuming that only post-growth income matters in social welfare. By contrast, this paper takes the view that “status quo matters” and that social welfare should logically be defined on both inital and terminal income. This leads to consider ’non-anonymous’ Growth Incidence Curves that plot income growth rates against the various quantiles of the initial distribution. Dominance criteria that generalize those available for standard growth incidence curves are derived, which account for the inequality of individual income changes, conditional on initial income. An application to the cross-country distributional feature of global growth illustrates the analysis.
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Paper prepared for the Conference “Inequality: new directions”, Cornell University and London School of Economics, Ithaca 11–13 September 2009. I thank the participants to the conference and two ananoymous referees for very helpful comments.
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Bourguignon, F. Non-anonymous growth incidence curves, income mobility and social welfare dominance. J Econ Inequal 9, 605–627 (2011). https://doi.org/10.1007/s10888-010-9159-7
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DOI: https://doi.org/10.1007/s10888-010-9159-7