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More is Not Necessarily Better: An Empirical Analysis of the Inequality-Growth Tradeoff Using the Luxembourg Income Study

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  • Georges Heinrich

Abstract

Whenever a country experiences an increase in its mean income, inequality roars its ugly head and the net outcome in terms of poverty remains ambiguous. Kakwani (2000) proposes an instrument that allows quantifying this inequality-growth tradeoff. This paper applies that methodology to 28 middle- and high-income countries included in the Luxembourg Income Study database. It finds that the inequality-growth tradeoff is generally quite high for all countries. This finding implies that there can be no sustained reduction of poverty without income redistribution.

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  • Georges Heinrich, 2003. "More is Not Necessarily Better: An Empirical Analysis of the Inequality-Growth Tradeoff Using the Luxembourg Income Study," LIS Working papers 344, LIS Cross-National Data Center in Luxembourg.
    • Handle: RePEc:lis:liswps:344
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    1. Sen, Amartya, 1983. "Poor, Relatively Speaking," Oxford Economic Papers, Oxford University Press, vol. 35(2), pages 153-169, July.
    2. Sen, Amartya K, 1976. "Poverty: An Ordinal Approach to Measurement," Econometrica, Econometric Society, vol. 44(2), pages 219-231, March.
    3. Callan, Tim & Nolan, Brian, 1991. "Concepts of Poverty and the Poverty Line," Journal of Economic Surveys, Wiley Blackwell, vol. 5(3), pages 243-261.
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    1. Daniel Sotelsek-Salem & Ismael Ahamdanech-Zarco & John Bishop, 2012. "Dominance testing for ‘pro-poor’ growth with an application to European growth," Empirical Economics, Springer, vol. 43(2), pages 723-739, October.

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