Inequality in Good and Bad Times: A Cross-Country Approach

42 Pages Posted: 13 Feb 2019

See all articles by Burcu Hacibedel

Burcu Hacibedel

IMF

Pierre Mandon

Université d'Auvergne - Clermont 1

Priscilla Muthoora

International Monetary Fund (IMF)

Nathalie Pouokam

International Monetary Fund (IMF)

Date Written: January 2019

Abstract

This paper provides evidence of a strong relationship between the short-term dynamics of growth and inequality in developing economies. We find that reductions in inequality during growth upswings are largely reversed during growth slowdowns. Using a new methodology (mediation analysis), we identify unemployment, and youth unemployment especially, as the main channel through which fluctuations in growth affect future dynamics in inequality. These findings suggest that both the quality of jobs created and labor market policies are important to ensure that growth outcomes are conducive to inequality reduction.

Keywords: Developing countries, Inequality, Growth, Mediation analysis, Equity, Justice, and Other Normative Criteria and Measurement, General

JEL Classification: D63, O10

Suggested Citation

Hacibedel, Burcu and Mandon, Pierre and Muthoora, Priscilla and Pouokam, Nathalie, Inequality in Good and Bad Times: A Cross-Country Approach (January 2019). IMF Working Paper No. 19/20, Available at SSRN: https://ssrn.com/abstract=3333744

Burcu Hacibedel (Contact Author)

IMF ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Pierre Mandon

Université d'Auvergne - Clermont 1 ( email )

49 Boulevard François Mitterrand
Clermont-Ferrand, Auvergne 63000
France

Priscilla Muthoora

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Nathalie Pouokam

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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