DP3316 One Third of the World's Growth and Inequality

Author(s): Danny Quah

Publication Date: April 2002

Keyword(s): china , distribution dynamics , gini coefficient , headcount index , india , poverty , world individual income distribution

JEL(s): D30 , O10 , O57

Programme Areas: International Macroeconomics

Link to this Page: www.cepr.org/pubs/dps/DP3316.asp

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.