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Did growth become less pro-poor in the 1990s ?

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  • Lopez, Humberto

Abstract

The author analyzes the stability of the empirical relationship between growth and changes in inequality over time. He concludes that while during the 1970s and 1980s the growth process was not accompanied by increases in inequality, during the 1990s a positive and significant correlation appears in the data. For this decade, he estimates that a 1 percent growth rate would be associated with an increase in the gini coefficient of between .3 to .5 percent. This positive correlation is hidden when one estimates the model without allowing for changes in the relationship over the different decades. The finding is robust to a number of departures from the basic specification including: (1) the use of alternative specifications to isolate decadal shifts; (2) the use of robust estimation techniques that address the potential influence of outliers; (3) restricting the sample to a balanced panel for the 1980s and 1990s to control for changes in the composition of the sample related to the unbalanced nature of the panel; and (4) considering the possibility of fixed effects in the data. The author also explores the impact of this structural change in the rate of poverty reduction and concludes that it is far from negligible.

Suggested Citation

  • Lopez, Humberto, 2006. "Did growth become less pro-poor in the 1990s ?," Policy Research Working Paper Series 3931, The World Bank.
    • Handle: RePEc:wbk:wbrwps:3931
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    References listed on IDEAS

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    1. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-766, May.
    2. Deininger, Klaus & Squire, Lyn, 1996. "A New Data Set Measuring Income Inequality," The World Bank Economic Review, World Bank, vol. 10(3), pages 565-591, September.
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    4. Deininger, Klaus & Squire, Lyn, 1996. "A New Data Set Measuring Income Inequality," The World Bank Economic Review, World Bank, vol. 10(3), pages 565-591, September.
    5. Lopez, Humberto & Serven, Luis, 2006. "A normal relationship ? Poverty, growth, and inequality," Policy Research Working Paper Series 3814, The World Bank.
    6. Kristin J. Forbes, 2000. "A Reassessment of the Relationship between Inequality and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 869-887, September.
    7. Ravallion, Martin & Chen, Shaohua, 1997. "What Can New Survey Data Tell Us about Recent Changes in Distribution and Poverty?," The World Bank Economic Review, World Bank, vol. 11(2), pages 357-382, May.
    8. Dollar, David & Kraay, Aart, 2002. "Growth Is Good for the Poor," Journal of Economic Growth, Springer, vol. 7(3), pages 195-225, September.
    9. Kraay, Aart, 2006. "When is growth pro-poor? Evidence from a panel of countries," Journal of Development Economics, Elsevier, vol. 80(1), pages 198-227, June.
    10. Banerjee, Abhijit V & Duflo, Esther, 2003. "Inequality and Growth: What Can the Data Say?," Journal of Economic Growth, Springer, vol. 8(3), pages 267-299, September.
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    Cited by:

    1. Partha Gangopadhyay & Biswa N. Bhattacharyay, 2012. "Can there be a Wave-Like Association between Economic Growth and Inequality? Theory and Lessons for East Asia from the Middle East," CESifo Working Paper Series 3953, CESifo.
    2. Elżbieta Sobczak & Bartosz Bartniczak & Andrzej Raszkowski, 2021. "Implementation of the No Poverty Sustainable Development Goal (SDG) in Visegrad Group (V4)," Sustainability, MDPI, vol. 13(3), pages 1-21, January.
    3. Partha Gangopadhyay & Biswa Nath Bhattacharyay, 2015. "Is there a Nonlinear Relationship between Economic Growth and Inequality? Theory and Lessons from ASEAN, People Republic of China and India," CESifo Working Paper Series 5377, CESifo.

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    Keywords

    Achieving Shared Growth; Inequality; Services&Transfers to Poor; Poverty Impact Evaluation; Economic Growth;
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