Type | Report |

Title | The global convergence of income distribution |

Author(s) | |

Publication (Day/Month/Year) | 2012 |

URL | http://www.pdx.edu/econ/sites/www.pdx.edu.econ/files/inequality_convergence_complete_0.pdf |

Abstract | What happens to income distribution during the course of economic development? New higher quality international data show a marked pattern of inequality convergence, where inequality becomes more similar across countries as income levels rise. Inequality has tended to fall in high inequality countries as their economies grow, and inequality has tended to rise in low inequality countries. This is clear in linear regression trends, piecewise trends, and stochastic kernel estimation. The stochastic kernel estimation models the evolution of inequality in the income domain, rather than the more typical time domain, and allows for complex dynamics. The evidence of inequality convergence is confirmed in numerous robustness checks. The pattern of convergence is consistent with both rising inequality in many high-income countries and falling inequality in high inequality developing countries, such as many Latin American countries. |