The Microeconomics of Income Distribution Dynamics in East Asia and Latin America

by Oxford University Press USA, Nora Lustig (Editor), Francois Bourguignon (Editor), Francisco H. G. Ferreira (Editor)

Overview

Economists have had much to say about what causes aggregate economic growth, but they have been more reticent about the distributional dimension of that growth. To understand development and the process of poverty reduction requires understanding not only how total income grows, but also how its distribution behaves over time. 'The Microeconomics of Income Distribution Dynamics in East Asia and Latin America' is a major new contribution to that process. The authors propose a decomposition of differences in entire distributions of household incomes, shedding new light on the powerful, and often conflicting, forces that underpin the changes in poverty and inequality that accompany the process of economic development. This approach is applied to three East Asian countries—Indonesia, Malaysia, and China—and to four in Latin America—Argentina, Brazil, Colombia, and Mexico.

Product Details

ISBN-13:	9780821358610
Publisher:	World Bank Publications
Publication date:	10/01/2004
Series:	A World Bank Publication
Pages:	436
Product dimensions:	6.22(w) x 9.26(h) x 1.10(d)

Table of Contents

	Preface	xiii
	Acknowledgments	xv
	Contributors	xvii
	Abbreviations and Acronyms	xix
1	Introduction	1
2	Decomposing Changes in the Distribution of Household Incomes: Methodological Aspects	17
3	Characterization of Inequality Changes through Microeconometric Decompositions: The Case of Greater Buenos Aires	47
4	The Slippery Slope: Explaining the Increase in Extreme Poverty in Urban Brazil, 1976-96	83
5	The Reversal of Inequality Trends in Colombia, 1978-95: A Combination of Persistent and Fluctuating Forces	125
6	The Evolution of Income Distribution during Indonesia's Fast Growth, 1980-96	175
7	The Microeconomics of Changing Income Distribution in Malaysia	219
8	Can Education Explain Changes in Income Inequality in Mexico?	275
9	Distribution, Development, and Education in Taiwan, China, 1979-94	313
10	A Synthesis of the Results	357
	Index	407
	Figures
3.1	Gini Coefficient of Equivalent Household Income Distribution in Greater Buenos Aires, 1985-98	49
3.2	Hourly Earnings-Education Profiles for Men (Heads of Household and Other Family Members), Age 40	55
3.3	Hourly Earnings-Education Profiles for Women (Spouses), Age 40	56
3.4	Weekly Hours of Work by Educational Level for Men (Heads of Household), Age 40	59
4.1	Macroeconomic Instability in Brazil: Inflation	84
4.2	Macroeconomic Instability in Brazil: Per Capita GDP	84
4.3	Truncated Pen Parades, 1976-96	87
4.4	Plotted Quadratic Returns to Education (Wage Earners)	88
4.5	Plotted Quadratic Returns to Experience (Wage Earners)	89
4.6	Combined Price Effects by Sector	106
4.7	Price Effects Separately and for Both Sectors Combined	107
4.8	Occupational-Choice Effects	108
4.9	The Labor Market: Combining Price and Occupational-Choice Effects	109
4.10	Demographic Effects	110
4.11	Shift in the Distribution of Education, 1976-96	111
4.12	Education Endowment and Demographic Effects	112
4.13	A Complete Decomposition	113
5.1	Average Household Size by Income Decile in Urban Colombia, Selected Years	135

Editorial Reviews

"This volume presents a fascinating collection of studies on the dynamics of income inequality based on micro data. Using a simple but powerful empirical methodology, the authors analyze the roles of prices, occupational choice, and educational choice in accounting for household income and its contribution to inequality. It casts doubt on the grand theories of growth and income inequality that have dominated discussions in development economics. It paves the way for a full-blown, micro-based general equilibrium theory of income determination and income inequality." —James Heckman, Professor of Economics, University of Chicago, and 2000 Nobel Laureate in Economics

"This is a ground-breaking study by an outstanding group of authors. In attempting to disentangle the forces that influence changes in income distribution over time and to assess their quantitative impact within a coherent decomposition framework, the volume sets a new standard for future research on the dynamics of income inequality." —Anthony Shorrocks, Director, World Institute for Development Economics Research, Helsinki

From the Publisher