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WIDER dp 2002/38.
Published: Inequality and Growth: Theory and Policy Implications
(eds. Theo Eicher and Stephen J. Turnovsky), Chapter 2, pp. 27--58.
MIT Press, Cambridge
CEP DISCUSSION PAPER NO.535 June 2002
Technology and Growth
One third of the world's growth and inequality
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 on 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.
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