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Measuring the Impact of Various Income Sources on the Link between Inequality and Development: Implications for the Kuznets Curve

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  • Joseph Deutsch
  • Jacques Silber

Abstract

To understand the link between inequality and development, a decomposition of the Gini index by income sources is used that emphasizes the role of three components measuring the impact of the shares of the sources, the degree to which they are unequally distributed, and their correlation with total income. Such a breakdown explains why the rising section of the Kuznets curve is mainly the consequence of the increasing share of wages while its declining section reflects the decreasing share of entrepreneurial income and the negative correlation between transfers and total income. The data sources were provided by the International Labour Office.

Suggested Citation

  • Joseph Deutsch & Jacques Silber, 2004. "Measuring the Impact of Various Income Sources on the Link between Inequality and Development: Implications for the Kuznets Curve," Review of Development Economics, Wiley Blackwell, vol. 8(1), pages 110-127, February.
    • Handle: RePEc:bla:rdevec:v:8:y:2004:i:1:p:110-127
    DOI: 10.1111/j.1467-9361.2004.00223.x
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    References listed on IDEAS

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    1. Ahluwalia, Montek S., 1976. "Inequality, poverty and development," Journal of Development Economics, Elsevier, vol. 3(4), pages 307-342, December.
    2. Anand, Sudhir & Kanbur, S. M. R., 1993. "Inequality and development A critique," Journal of Development Economics, Elsevier, vol. 41(1), pages 19-43, June.
    3. Ahluwalia, Montek S, 1976. "Income Distribution and Development: Some Stylized Facts," American Economic Review, American Economic Association, vol. 66(2), pages 128-135, May.
    4. Joseph Deutsch & Jacques Silber, 2001. "The Kuznets Curve and the Impact of Various Income Sources on the Link Between Inequality and Development," Working Papers 2001-03, Bar-Ilan University, Department of Economics.
    5. Anand, Sudhir & Kanbur, S. M. R., 1993. "The Kuznets process and the inequality--development relationship," Journal of Development Economics, Elsevier, vol. 40(1), pages 25-52, February.
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    Cited by:

    1. Ayal Kimhi, 2010. "Entrepreneurship and income inequality in southern Ethiopia," Small Business Economics, Springer, vol. 34(1), pages 81-91, January.
    2. Sima Siami-Namini, 2019. "Agriculture and Non-Agriculture Growth, Inflation and Income Inequality in Developed and Developing Countries," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 11(11), pages 43-51, November.
    3. Paul, Saumik, 2016. "Heterogeneous Structural Transformation and Growth Incidence across the Income Distribution: the Kuznets Curve Revisited," CEI Working Paper Series 2016-1, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    4. János Pénzes & Zoltán Bujdosó & Lóránt Dávid & Zsolt Radics & Gábor Kozma, 2014. "Differing development paths of spatial income inequalities after the political transition — by the example of Hungary and its regions," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(1), pages 73-84.
    5. Monica Szeles, 2013. "Re-examining the relationship between economic growth and inequality in the New Member States," Quality & Quantity: International Journal of Methodology, Springer, vol. 47(5), pages 2799-2813, August.
    6. Michele Giammatteo, 2006. "Inequality in Transition Countries: The Contributions of Markets and Government Taxes and Transfers," LIS Working papers 443, LIS Cross-National Data Center in Luxembourg.
    7. Gilad D. Aharonovitz, 2011. "Why Cannot Poor Countries Utilize Existing Knowledge? Expansion Of Firms And Human Capital Accumulation By Training," Economic Inquiry, Western Economic Association International, vol. 49(1), pages 108-121, January.
    8. Ayal Kimhi, 2004. "Growth, Inequality and Labor Markets in LDCs: A Survey," CESifo Working Paper Series 1281, CESifo.
    9. Lawrence Adu Asamoah & Francesco Figari & Andrea Vezzulli, 2021. "Spillover effects of innovation and entrepreneurial activity on income inequality in developing countries: A spatial panel approach," Regional Science Policy & Practice, Wiley Blackwell, vol. 13(5), pages 1661-1686, October.
    10. Sima Siami-Namini, 2019. "Agriculture and Non-Agriculture Growth, Inflation and Income Inequality in Developed and Developing Countries," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 11(11), pages 1-43, November.
    11. Amparo Castelló-Climent & Rafael Doménech, 2020. "Global | Desigualdad de la renta y de capital humano revisitadas [Global | Human capital and income inequality revisited]," Working Papers 20/17, BBVA Bank, Economic Research Department.
    12. Michele Giammatteo, 2007. "The bidimensional decomposition of inequality: A nested Theil approach," LIS Working papers 466, LIS Cross-National Data Center in Luxembourg.

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