Publication: Growth is Good for the Poor
Date
2001-04
ISSN
Published
2001-04
Author(s)
Abstract
When average income rises, the average
incomes of the poorest fifth of society rise
proportionately. This is a consequence of the strong
empirical regularity that the share of income accruing to
the bottom quintile does not vary systematically with
average income. The authors document this empirical
regularity in a sample of 92 countries spanning the past
four decades and show that it holds across regions, periods,
income levels, and growth rates. The authors next ask
whether the factors that explain cross-country differences
in the growth rates of average incomes have differential
effects on the poorest fifth of society. They find that
several determinants of growth--such as good rule of law,
opennness to international trade, and developed financial
markets--have little systematic effect on the share of
income that accrues to the bottom quintile. Consequently,
these factors benefit the poorest fifth of society as much
as everyone else. Thee is some weak evidence that
stabilization from high inflation and reductions in the
overall size of government not only increase growth but also
increase the income share of the poorest fifth in society.
Finally, the authors examine several factors commonly
thought to disproportionately benefit the poorest in
society, but find little evidence of their effects. The
absence of robust findings emphasizes that relatively little
is known about the broad forces that account for the
cross-country and intertemporal variation in the share of
income accruing to the poorest fifth of society.
Link to Data Set
Citation
“Dollar, David; Kraay, Aart. 2001. Growth is Good for the Poor. Policy Research Working Paper;No. 2587. © World Bank, Washington, DC. http://hdl.handle.net/10986/19679 License: CC BY 3.0 IGO.”
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