Growth, Inequality, and Social Welfare: Cross-Country Evidence

49 Pages Posted: 20 Apr 2016

See all articles by David Dollar

David Dollar

World Bank - Development Economics Group (DEC)

Tatjana Kleineberg

Yale University

Aart Kraay

World Bank - Development Research Group (DECRG)

Date Written: April 1, 2014

Abstract

Social welfare functions that assign weights to individuals based on their income levels can be used to document the relative importance of growth and inequality changes for changes in social welfare. In a large panel of industrial and developing countries over the past 40 years, most of the cross-country and over-time variation in changes in social welfare is due to changes in average incomes. In contrast, the changes in inequality observed during this period are on average much smaller than changes in average incomes, are uncorrelated with changes in average incomes, and have contributed relatively little to changes in social welfare.

Keywords: Inequality, Achieving Shared Growth, Economic Conditions and Volatility, Economic Theory & Research, Equity and Development

Suggested Citation

Dollar, David and Kleineberg, Tatjana and Kraay, Aart, Growth, Inequality, and Social Welfare: Cross-Country Evidence (April 1, 2014). World Bank Policy Research Working Paper No. 6842. Available at SSRN: https://ssrn.com/abstract=2429102

David Dollar (Contact Author)

World Bank - Development Economics Group (DEC) ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

Tatjana Kleineberg

Yale University

New Haven, CT 06520
United States

Aart Kraay

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States
202-473-5756 (Phone)
202-522-3518 (Fax)

HOME PAGE: http://econ.worldbank.org/staff/akraay

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