Growth, Inequality, and Welfare: Comparisons Across Space and Time

Posted: 24 Jun 2008

See all articles by Carola Gruen

Carola Gruen

Government of the Federal Republic of Germany - Institute for Employment Research (IAB); University of the Witwatersrand - School of Economics and Business Sciences

Stephan Klasen

University of Goettingen (Gottingen) - Faculty of Economics and Business Administration; CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

Abstract

We propose and apply several welfare measures that combine average income with a measure of inequality to undertake cross-country comparisons of aggregate welfare for the 1970 to 2000 period. Our welfare measures, which are based on theoretical and empirical findings on the role of inequality in social welfare, drastically change the impression of levels of welfare, significantly affect the welfare ranking of countries in different benchmark years, affect changes in ranking over time, and affect convergence between industrialized and developing countries. While the results are sensitive to the type of inequality and its presumed effect on welfare, the results are robust to different ways to address comparability problems inherent in the inequality data used.

JEL Classification: 131, D63

Suggested Citation

Gruen, Carola and Klasen, Stephan, Growth, Inequality, and Welfare: Comparisons Across Space and Time. Oxford Economic Papers, Vol. 60, No. 2, pp. 212-236, 2008. Available at SSRN: https://ssrn.com/abstract=1150608 or http://dx.doi.org/gpm042

Carola Gruen (Contact Author)

Government of the Federal Republic of Germany - Institute for Employment Research (IAB) ( email )

Regensburger Str. 104
Nuremberg, 90478
Germany

University of the Witwatersrand - School of Economics and Business Sciences ( email )

Private Bag 3
P.O. Wits 2050
Johannesburg
South Africa

Stephan Klasen

University of Goettingen (Gottingen) - Faculty of Economics and Business Administration ( email )

Platz der Goettinger Sieben 3
Goettingen, 37073
Germany
+49-551-397303 (Phone)
+49-551-397302 (Fax)

HOME PAGE: www.vwl.wiso.uni-goettingen.de/klasen.html

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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