Working Paper: NBER ID: w7224
Authors: Matthew Higgins; Jeffrey G. Williamson
Abstract: Klaus Deininger and Lyn Squire have recently produced an inequality data base for a panel of countries from the 1960s to the 1990s. We use these data to decompose the sources of inequality into three central parts: the demographic or cohort size effect; the so-called Kuznets Curve or demand effects; and the commitment to globalization or policy effects. We also control for education supply, the so-called natural resource curse and other variables suggested by the literature. While the Kuznets Curve comes out of hiding when the inequality relationship is conditioned by the other two, cohort size seems to be the most important force at work. We resolve the apparent conflict between this macro finding on cohort size and the contrary implications of recent research based on micro data.
Keywords: inequality; cohort size; Kuznets curve; globalization
JEL Codes: O1; J1; I3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| large mature working-age cohorts (J19) | lower aggregate inequality (F62) |
| large young adult cohorts (J19) | higher aggregate inequality (F62) |
| cohort size (C92) | income distribution (D31) |
| Kuznets curve (conditioned on cohort size and economic openness) (O44) | validated (C52) |
| globalization policies (F68) | inequality (D63) |