Average incomes of the poorest quintile rise proportionately with average incomes in a sample of 92 countries spanning the last four decades. This is because the share of income of the poorest quintile does not vary systematically with average income. It also does not vary with many of the policies and institutions that explain growth rates of average incomes, nor does it vary with measures of policies intended to benefit the poorest in society. This evidence emphasizes the importance of economic growth for poverty reduction.
This is a preview of subscription content, access via your institution.
Buy single article
Instant access to the full article PDF.
Tax calculation will be finalised during checkout.
Subscribe to journal
Immediate online access to all issues from 2019. Subscription will auto renew annually.
Tax calculation will be finalised during checkout.
Ali, A. G. A., and I. Elbadawi. (2001). “Growth Could Be Good for the Poor,” Manuscript, Arab Planning Institute and the World Bank.
Aitchinson, J., and J. A. C. Brown. (1966). The Lognormal Distribution. Cambridge: Cambridge University Press.
Agenor, P.-R. (1998). “Stabilization Policies, Poverty, and the Labour Market,” Manuscript, International Monetary Fund and the World Bank.
Alesina, A., and D. Rodrik. (1994). “Distributive Politics and Economic Growth,” Quarterly Journal of Economics 109(2), 465–490.
Arellano, M., and O. Bover. (1995). “Another Look at the Instrumental-Variable Estimation of Error-Components Models,” Journal of Econometrics 68, 29–52.
Atkinson, A. B., and A. Brandolini. (1999). “Promise and Pitfalls in the Use of ‘secondary’ Data-Sets: Income Inequality in OECD Countries,” Manuscript. Nuffield College, Oxford and Banca d'Italia: Research Department.
Beck, T., A. Demirguc-Kunt, and Ross Levine. (1999). “A New Database on Financial Development and Structure,” World Bank Policy Research Department Working Paper No. 2146.
Banerjee, A. V., and E. Duflo. (1999). “Inequality and Growth: What Can the Data Say?” Manuscript, MIT.
Barro, R. J. (2000). “Inequality and Growth in a Panel of Countries,” Journal of Economic Growth 5, 5–32.
Barro, R. J., and J.-W. Lee. (2000). “International Data on Educational Attainment: Updates and Implications,” Harvard University Center for International Development Working Paper No. 42.
Bidani, B., and M. Ravallion. (1997). “Decomposing Social Indicators Using Distributional Data,” Journal of Econometrics 77, 125–139.
Bils, M., and P. Klenow. (2000). “Does Schooling Cause Growth?” American Economic Review 90(5), 1160–1183.
Blundell, R., and S. Bond. (1998). “Initial Conditions and Moment Restrictions in Dynamic Panel Data Models,” Journal of Econometrics 87, 115–143.
Chen, S., and M. Ravallion. (1997). “What Can New Survey Data Tell Us about Recent Changes in Distribution and Poverty?” The World Bank Economic Review 11(2), 357–382.
Chen, S., and M. Ravallion. (2000). “How Did the World's Poorest Fare in the 1990s?” Manuscript, the World Bank. Data and paper available at http, //www.worldbank.org/research/povmonitor/.
Datt, G., and M. Ravallion. (1999). “When is Growth Pro-Poor?” Manuscript, The World Bank.
Deininger, K., and L. Squire. (1996). “A New Data Set Measuring Income Inequality,” The World Bank Economic Review 10(3), 565–591.
Easterly, W. (1999). “Life During Growth,” Journal of Economic Growth 4, 239–276.
Easterly, W. (2001). “The Middle-Class Consensus and Economic Development,” Journal of Economic Growth 6, 317–335.
Easterly, W., and S. Fischer. (2000). “Inflation and the Poor,” World Bank Policy Research Department Working Paper No. 2335.
Easterly, W., and S. T. Rebelo. (1993). “Fiscal Policy and Economic Growth: An Empirical Investigation,” Journal of Monetary Economics 32(3), 417–458.
Edwards, S. (1997). “Trade Policy, Growth, and Income Distribution,” American Economic Review 87(2), 205–210.
Filmer, D., and L. Pritchett. (1997). “Child Mortality and Public Spending on Health: How Much Does Money Matter?” Policy Research Working Paper No. 1864, The World Bank.
Fischer, S. (1993). “The Role of Macroeconomic Factors in Growth,” Journal of Monetary Economics 32(3), 485–512.
Forbes, K. J. (2000). “A Reassessment of the Relationship between Inequality and Growth,” American Economic Review 90(4), 869–897.
Foster, J., and M. Székely. (2001). “Is Economic Growth Good for the Poor? Tracking Low Incomes Using General Means,” Interamerican Development Bank Research Department Working Paper No. 453.
Frankel, J. A., and D. Romer. (1999). “Does Trade Cause Growth?” The American Economic Review (June), 379–399.
Gallup, J. L., S. Radelet, and A. Warner. (1998). “Economic Growth and the Income of the Poor,” Manuscript, Harvard Institute for International Development.
Galor, O., and J. Zeira. (1993). “Income Distribution and Macroeconomics,” Review of Economic Studies 60(1), 35–52.
Galor, O., and O. Moav. (2001). “From Physical to Human Capital Accumulation: Inequality and the Process of Development,” Brown University Working Paper 99–27.
Gouyette, C., and P. Pestieau. (1999). “Efficiency of the Welfare State,” Kyklos 52, 537–553.
Johnston, N, S. Kotz, and N. Balakrishnan. (1994). Continuous Univariate Distributions 2 edn, Vol. 2, New York: Wiley.
Kaufmann, D., A. Kraay, and P. Zoido-Lobatón. (1999). “Governance Matters,” World Bank Policy Research Department Working Paper No. 2196.
Knack, S., and P. Keefer. (1995). “Institutions and Economic Performance: Cross-Country Tests Using Alternative Institutional Measures,” Economics and Politics 7(3), 207–227.
Kraay, A., and M. Ravallion. (2001). “Measurement Error, Aggregate Growth, and the Distribution-Corrected Mean: A Comment on Foster-Székely,” Manuscript, The World Bank.
Kuznets, S. (1955). “Economic Growth and Income Inequality,” The American Economic Review 45(1), 1–28.
Leamer, E., H. Maul, S. Rodriguez, and P. Schott. (1999). “Does Natural Resource Abundance Increase Latin American Income Inequality?” Journal of Development Economics 59, 3–42.
Levine, R., N. Loayza, and T. Beck. (2000). “Financial Intermediation and Growth: Causality and Causes,” Journal of Monetary Economics 46, 31–77.
Li, H., and H. Zou. (1998). “Income Inequality is not Harmful for Growth: Theory and Evidence,” Review of Development Economics 2(3), 318–334.
Li, H., L. Squire, and H. Zou. (1998). “Explaining International and Intertemporal Variations in Income Inequality,” The Economic Journal 108, 26–43.
Lundberg, M., and L. Squire. (2000). “The Simultaneous Evolution of Growth and Inequality,” Manuscript, The World Bank.
Perotti, R. (1996). “Growth, Income Distribution and Democracy: What the Data Say,” Journal of Economic Growth 1, 149–187.
Persson, T., and G. Tabellini. (1994). “Is Inequality Harmful for Growth?” American Economic Review 84(3), 600–621.
Ravallion, M. (1997). “Can High-Inequality Countries Escape Absolute Poverty?” Economics Letters 56(1), 51–57.
Ravallion, M. (2001a). “Measuring Aggregate Welfare in Developing Countries: How Well do National Accounts and Surveys Agree?” World Bank Policy Research Department Working Paper No. 2665.
Ravallion, M. (2001b). “Growth, Inequality, and Poverty: Looking Beyond Averages,” World Development 29(11), 1803–1815.
Rodriguez, F., and D. Rodrik. (2000). “Trade Policy and Economic Growth: A Skeptic's Guide to the Cross-National Evidence,” In B. Bernanke, and K. Rogoff (eds), Macroeconomics Annual 2000, MIT Press for NBER.
Sachs, J. D., and A. Warner. (1995). “Economic Reform and the Process of Global Integration,” Brookings Papers on Economic Activity (1), 1–118.
Spilimbergo, A., J. L. Londono, and M. Szekely. (1999). “Income Distribution, Factor Endowments, and Trade Openness,” Journal of Development Economics 59, 77–101.
Summers, R., and A. Heston. (1991). “The Penn World Table (Mark 5): An Expanded Set of International Comparisons, 1950–88,” Quarterly Journal of Economics 106(2), 327–368.
United Nations University—World Institute for Development Economics Research (2000). World Income Inequality Database. Available online at http://www.wider.unu.edu/wiid/wiid.htm.
About this article
Cite this article
Dollar, D., Kraay, A. Growth is Good for the Poor. Journal of Economic Growth 7, 195–225 (2002). https://doi.org/10.1023/A:1020139631000
- income inequality