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Tolerance for inequality: Hirschman’s tunnel effect revisited

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  • Wannaphong Durongkaveroj

Abstract

Along the path of economic development, advancement of some groups naturally generates economic disparity in a society. The concurrent presence of winners and losers invariably gives rise to the psychological economic question of how the losers perceive, and respond to, the benefits of development. The ‘tunnel effect’ proposed by Hirschman (1973) provides valuable insights for understanding the changing tolerance for economic inequality among the losers in the process of economic growth. This paper critically discusses this proposition, reviews the related literature, and provides possible extensions.

Suggested Citation

  • Wannaphong Durongkaveroj, 2018. "Tolerance for inequality: Hirschman’s tunnel effect revisited," Departmental Working Papers 2018-23, The Australian National University, Arndt-Corden Department of Economics.
    • Handle: RePEc:pas:papers:2018-23
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    More about this item

    Keywords

    Income Inequality; Tunnel Effect; Development;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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