Abstract
The Growth Incidence Curve (GIC), introduced in the poverty measurement literature by Ravallion and Chen (Econ. Lett. 78(1), 93–99, 2003), proved to be a valuable and widely used tool to analyze the impact of growth on poverty and its ‘pro-poorness’. Beyond pro-poorness, however, the relationship between the shape of GICs and social welfare is ambiguous. If a declining GIC, together with a positive overall rate of growth, is unambiguously associated with a social welfare gain, such a shape is not the most common and the reciprocal is not necessarily true. This paper analyzes the social welfare properties of GICs, as well as their non-anonymous counterpart (NAGICs), which describe how income growth depends on the initial rank of individuals in the initial income distribution. NAGICs thus account not only for the change in the distribution of income but also for income mobility, and differ conceptually from their anonymous counterpart. However, their social welfare interpretation proves to be very similar.
Article PDF
References
Atkinson, A.B.: On the Measurement of Inequality. J. Econ. Theory 2(3), 244–263 (1970)
Berman, Y., Bourguignon, F.: “Evaluating the Distributive Incidence of Growth using Cross-Sections and Panels.” Mimeo (2023)
Bourguignon, F.: Non-Anonymous Growth Incidence Curves, Income Mobility and Social Welfare Dominance. J. Econ. Inequal. 9(4), 605–627 (2011)
Bresson, F., Duclos, J.-Y., Palmisano, F.: Intertemporal Pro-Poorness. Soc Choice Welfare 52(1), 65–96 (2019)
Dasgupta, P., Sen, A., Starrett, D.: Notes on the Measurement of Inequality. J. Econ. Theory 6(2), 180–187 (1973)
Foster, J.E., Shorrocks, A.F.: “Poverty Orderings and Welfare Dominance.” 91–110, Springer (1988)
Grimm, M.: Removing the Anonymity Axiom in Assessing Pro-Poor Growth. J. Econ. Inequal. 5(2), 179–197 (2007)
Hadar, J., Russell, W.R.: Rules for Ordering Uncertain Prospects. Am. Econ. Rev. 59(1), 25–34 (1969)
Jenkins, S.P., Van Kerm, P.: Assessing Individual Income Growth’’. Economica 83(332), 679–703 (2016)
Kakwani, N., Pernia, E.R.: What is Pro-Poor Growth? Asian Develop. Rev. 18(1), 1–16 (2000)
Kraay, A., Lakner, C., Özler, B., Decerf, B., Jolliffe, D., Sterck, O., Yonzan, N.: “A New Distribution Sensitive Index for Measuring Welfare, Poverty, and Inequality.” The World Bank Policy Research Working Papers (2023)
Lo Bue, M.C., Palmisano, F.: “The Individual Poverty Incidence of Growth.” Oxford Bullet. Econ. Stat. 82(6), 1295–1321
Palmisano, F., Van de Gaer, D.: History-Dependent Growth Incidence: A Characterization and an Application to the Economic Crisis in Italy. Oxford Econ. Papers 68(2), 585–603 (2016)
Palmisano, F., Peragine, V.: The Distributional Incidence of Growth: A Social Welfare Approach. Rev. Income Wealth 61(3), 440–464 (2015)
PSID “Total Family Income and Constructed Family Wealth.” http://psidonline.isr.umich.edu, The Panel Study of Income Dynamics (2018)
Ravallion, M.: “Pro-Poor Growth: A Primer.” The World Bank Policy Research Working Papers (2004)
Ravallion, M., Chen, S.: Measuring Pro-Poor Growth. Econ. Lett. 78(1), 93–99 (2003)
Ray, D., Genicot, G.: “Measuring Upward Mobility.” Mimeo (2023)
Shorrocks, A.F.: Ranking Income Distributions. Economica 50(197), 3–17 (1983)
Son, H.H.: A Note on Pro-Poor Growth. Econ. Lett. 82(3), 307–314 (2004)
Van Kerm, P.: Income Mobility Profiles. Econ Lett. 102(2), 93–95 (2009)
Author information
Authors and Affiliations
Corresponding author
Additional information
Publisher's Note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Supplementary Information
Below is the link to the electronic supplementary material.
Rights and permissions
Open Access This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article’s Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article’s Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/.
About this article
Cite this article
Berman, Y., Bourguignon, F. On the social welfare interpretation of growth incidence curves. J Econ Inequal (2023). https://doi.org/10.1007/s10888-023-09598-2
Received:
Accepted:
Published:
DOI: https://doi.org/10.1007/s10888-023-09598-2