Working Paper: CEPR ID: DP3316
Authors: Danny Quah
Abstract: This Paper studies growth and inequality in China and India ? two economies that account for a third of the world?s population. By modelling growth and inequality as components in a joint stochastic process, the Paper calibrates the impact each has no different welfare indicators and on the personal income distribution across the joint population of the two countries. For personal income inequalities in a China-India universe, the forces assuming first-order importance are macroeconomic ? growing average incomes dominate all else. The relation between aggregate economic growth and within-country inequality is insignificant for inequality dynamics.
Keywords: China; Distribution Dynamics; Gini Coefficient; Headcount Index; India; Poverty; World Individual Income Distribution
JEL Codes: D30; O10; O57
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| macroeconomic growth (O11) | improved welfare indicators for the poor (I32) |
| macroeconomic growth (O11) | aggregate economic growth benefits the poor (F62) |
| rising average incomes (E25) | personal income distribution (D31) |
| aggregate economic growth (O40) | poverty reduction (I32) |
| rising inequality (D31) | benefits of economic growth not accruing to the poor (F62) |