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

By Burcu Hacibedel, Pierre Mandon, Priscilla S Muthoora, Nathalie Pouokam

January 22, 2019

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Burcu Hacibedel, Pierre Mandon, Priscilla S Muthoora, and Nathalie Pouokam. Inequality in Good and Bad Times: A Cross-Country Approach, (USA: International Monetary Fund, 2019) accessed December 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

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.

Subject: Consumption, Income distribution, Income inequality, Labor, National accounts, Personal income, Unemployment

Keywords: Caribbean, Confidence interval, Consumption, Dependent variable, Developing countries, East Asia, Europe, Explanatory variable, Global, Growth, Growth conditions, Growth rate, Income distribution, Income inequality, Inequality, Mediation analysis, Middle East, Personal income, Structural equation, Unemployment, Unemployment channel, WP, Youth unemployment

Publication Details

Pages:

41
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2019/020
Stock No:

WPIEA2019020
ISBN:

9781484392911
ISSN:

1018-5941

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