National income and its distribution

Brueckner, Markus, Dabla Norris, Era and Gradstein, Mark (2015) National income and its distribution. Journal of Economic Growth, 20 2: 149-175. doi:10.1007/s10887-015-9113-4

Author Brueckner, Markus
Dabla Norris, Era
Gradstein, Mark
Title National income and its distribution
Journal name Journal of Economic Growth   Check publisher's open access policy
ISSN 1381-4338
Publication date 2015-06
Year available 2015
Sub-type Article (original research)
DOI 10.1007/s10887-015-9113-4
Open Access Status
Volume 20
Issue 2
Start page 149
End page 175
Total pages 27
Place of publication New York, United States
Publisher Springer New York LLC
Collection year 2016
Language eng
Abstract This paper revisits the effect of national income on distributional equality. Although the link between the two has featured prominently in the literature, a causal effect has been difficult to pin down due to the endogeneity of these variables. We use plausibly exogenous variations in the incomes of countries’ trading partners weighted by the level of trade flows, and international oil price shocks, as instruments for within-country variations in countries’ real GDP per capita. Controlling for country and time fixed effects, our instrumental variables regressions show that increases in national income have a significant moderating effect on income inequality: a 1 % increase in real GDP per capita reduces the Gini coefficient by around 0.08 percentage points on average. We document that education is one possible channel that mediates this relationship, and explore the implications of our findings for the welfare effect of national income growth.
Keyword National income
Economic growth
Income distribution
Q-Index Code C1
Q-Index Status Confirmed Code
Institutional Status UQ

Document type: Journal Article
Sub-type: Article (original research)
Collections: Official 2016 Collection
School of Economics Publications
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