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Growth Is Good for the Poor (2000)
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| Venue: | Journal of Economic Growth |
| Citations: | 375 - 4 self |
BibTeX
@ARTICLE{Dollar00growthis,
author = {David Dollar and Aart Kraay},
title = {Growth Is Good for the Poor},
journal = {Journal of Economic Growth},
year = {2000},
volume = {7},
pages = {195--225}
}
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Abstract
Average incomes of the poorest fifth of society rise proportionately with average incomes. 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. In this paper we document this empirical regularity in a large sample of 92 countries spanning the past four decades, and show that it holds across regions, time periods, income levels, and growth rates. We next ask whether the factors that explain cross-country differences in growth rates of average incomes have differential effects on the poorest fifth of society. We find that several determinants of growth -- such as good rule of law, openness 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. There is some weak evidence that stabilization from high inflation as well as reductions in the overall size of government not only raise growth but also increase the income share of the poorest fifth in society. Finally we 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 we know relatively little 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. _________________________ 1818 H Street N.W., Washington, DC, 20433 (ddollar@worldbank.org, akraay@worldbank.org). We are grateful to Dennis Tao for excellent research assistance. This paper and the accompanying dataset are available at www.worldbank.org/research/gro...
Keyphrases
average income income accruing growth rate bottom quintile good rule org research gro accompanying dataset intertemporal variation large sample financial market akraay worldbank several determinant income level excellent research assistance strong empirical regularity several factor cross-country difference society rise high inflation street n.w. overall size empirical regularity robust finding little systematic effect little evidence ddollar worldbank broad force differential effect weak evidence dennis tao international trade income share next ask time period
