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GINI DP 60: Income Inequality and Poverty during Economic Recession and Growth: Sweden 1991-2007

Author

Listed:
  • Jan Jonsson

    (Swedish Institute for Social research)

  • Mood, C.
  • Bihagen, E.

Abstract

Does increasing income inequality also imply increased poverty? The answer to this question would intuitively appear to be “yes”, but the issue is more involved than that. Especially, because both inequality and poverty are likely to be related to business cycles, studying the relation between them means that we need to uncover the dynamics of economic growth and decline, and how these changes relate to income differences and poverty risks. This is what we do in this paper. We illuminate the relation between inequality and poverty by studying the case of Sweden 1991- 2007, a period of great macro-economic changes, from boom to bust to boom again. It is not our intention to address the issue of causality; if possible at all, answering such a question would require very long time periods and/or many countries. But we are able to show that for a modern Western economy, a deep recession reduced income inequality but increased poverty, measured as the risk of falling below the (“absolute”) poverty line. Income inequality, during this period, was pro-cyclical, increasing as the economy improved. Poverty, on the other hand, was anti-cyclical – while increasing during the recession, it decreased during growth.

Suggested Citation

  • Jan Jonsson & Mood, C. & Bihagen, E., 2013. "GINI DP 60: Income Inequality and Poverty during Economic Recession and Growth: Sweden 1991-2007," GINI Discussion Papers 60, AIAS, Amsterdam Institute for Advanced Labour Studies.
    • Handle: RePEc:aia:ginidp:60
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    File URL: https://www1.feb.uva.nl/aias/60-4-1-7.pdf
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    References listed on IDEAS

    as
    1. Mary Jo Bane & David T. Ellwood, 1986. "Slipping into and out of Poverty: The Dynamics of Spells," Journal of Human Resources, University of Wisconsin Press, vol. 21(1), pages 1-23.
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    3. Nolan, Brian & Whelan, Christopher T., 1996. "Resources, Deprivation, and Poverty," OUP Catalogue, Oxford University Press, number 9780198287858.
    4. Carina Mood, 2011. "Lagging behind in good times: immigrants and the increased dependence on social assistance in Sweden," International Journal of Social Welfare, John Wiley & Sons, vol. 20(1), pages 55-65, January.
    5. Per Engstrom & Bertil Holmlund, 2009. "Tax evasion and self-employment in a high-tax country: evidence from Sweden," Applied Economics, Taylor & Francis Journals, vol. 41(19), pages 2419-2430.
    6. Veli-Matti Ritakallio & Olof B ckman & Johan Fritzell, 2011. "Income inequality and poverty: do the Nordic countries still constitute a family of their own?," LIS Working papers 563, LIS Cross-National Data Center in Luxembourg.
    7. Richard Layte & Brian Nolan & Christopher T. Whelan, 2001. "Reassessing Income and Deprivation Approaches to the Measurement of Poverty in the Republic of Ireland," The Economic and Social Review, Economic and Social Studies, vol. 32(3), pages 239-261.
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    Cited by:

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