The personal and the factor distributions of income in a cross-section of countries

Emilie Daudey · Cecilia García-peñalosa B

194 citations0/0 files storedThe Journal of Development Studies

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Income, Poverty, and Inequality Labor market dynamics and wage inequality Economic Theory and Policy

Abstract

The shares of capital and labour in national income vary substantially both over time and across countries. This paper shows that the factor distribution of income is an essential determinant of the personal distribution of income. We use cross-country and panel data for a group of developed and developing countries to show that a larger labour share is associated with a lower Gini coefficient of personal incomes. This effect is not only statistically significant but also economically important. An increase in the labour share in Mexico to that observed in the US would reduce the Gini coefficient of the former by between two and five points.

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References

1970On the measurement of inequality 1973On Economic Inequality 1991The Penn World Table (Mark 5): An Expanded Set of International Comparisons, 1950-1988 1996A New Data Set Measuring Income Inequality 2001Growth is Good for the Poor 2000Inequality and Growth in a Panel of Countries 2001International data on educational attainment: updates and implications 2002Getting Income Shares Right

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