Shared Prosperity: Links to Growth, Inequality and Inequality of Opportunity

34 Pages Posted: 20 Apr 2016

See all articles by Ambar Narayan

Ambar Narayan

World Bank, Poverty Global Practice

Jaime Saavedra-Chanduvi

World Bank

Sailesh Tiwari

World Bank; Brown University - Department of Economics

Date Written: October 1, 2013

Abstract

Focusing on the welfare of the less well off as a measure of real societal progress is the fundamental principle underlying the WBG indicator of "shared prosperity" , namely income growth of the bottom 40 percent in every country. This paper uses a database assembled by the World Bank Group to investigate some basic characteristics of shared prosperity, particularly its relationship with overall economic growth and inequality. Initial estimates using this dataset of 79 countries show that median income growth of the bottom 40 percent (circa 2005-2010) was 4.2 percent, a high number in comparison to the 3.1 percent per capita income growth of the overall population. In addition, the low and lower-middle income countries appear to be trailing the upper middle and high income countries in boosting shared prosperity. Establishing conceptual links between income growth of the bottom 40 percent, the overall growth rate and reviewing existing evidence on how these relate to inequality, the paper discusses two main ideas. First, shared prosperity is strongly correlated with overall prosperity implying that the whole host of policies that are important to generate and sustain growth remain relevant. Second, boosting shared prosperity will also require a concerted effort to strengthen the social contract, particularly in the area of promoting equality of opportunity. Growing evidence suggests that improving access for all and reducing inequality of opportunities -- particularly those related to human capital development of children -- are not only about "fairness" and building a "just society" , but also about realizing a society's aspirations of economic prosperity.

Keywords: Rural Poverty Reduction, Inequality, Achieving Shared Growth, Poverty Impact Evaluation, Services & Transfers to Poor

Suggested Citation

Narayan, Ambar and Saavedra-Chanduvi, Jaime and Tiwari, Sailesh, Shared Prosperity: Links to Growth, Inequality and Inequality of Opportunity (October 1, 2013). World Bank Policy Research Working Paper No. 6649, Available at SSRN: https://ssrn.com/abstract=2338259

Ambar Narayan (Contact Author)

World Bank, Poverty Global Practice ( email )

1818 H Street, NW
Washington, DC 20433
United States

Jaime Saavedra-Chanduvi

World Bank ( email )

1818 H Street NW
Washington, DC 20433
United States

Sailesh Tiwari

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Brown University - Department of Economics ( email )

64 Waterman Street
Providence, RI 02912
United States

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