Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/161096
Authors: 
Ferreira, Francisco H. G.
Firpo, Sergio
Galvao, Antonio F.
Year of Publication: 
2017
Series/Report no.: 
IZA Discussion Papers 10473
Abstract: 
Different episodes of economic growth display widely varying distributional characteristics, both across countries and over time. Growth is sometimes accompanied by rising and sometimes by falling inequality. Applied economists have come to rely on the Growth Incidence Curve, which gives the quantile-specific rate of income growth over a certain period, to describe and analyze the incidence of economic growth. This paper discusses the identification conditions, and develops estimation and inference procedures for both actual and counterfactual growth incidence curves, based on general functions of the quantile potential outcome process over the space of quantiles. The paper establishes the limiting null distribution of the test statistics of interest for those general functions, and proposes resampling methods to implement inference in practice. The proposed methods are illustrated by a comparison of the growth processes in the United States and Brazil during 1995-2007. Although growth in the average real wage was disappointing in both countries, the distribution of that growth was markedly different. In the United States, wage growth was mediocre for the bottom 80 percent of the sample, but much more rapid for the top 20 percent. In Brazil, conversely, wage growth was rapid below the median, and negative at the top. As a result, inequality rose in the United States and fell markedly in Brazil.
Subjects: 
growth incidence curves
potential outcomes
inference
quantile process
JEL: 
C14
C21
D31
I32
Document Type: 
Working Paper

Files in This Item:
File
Size
806.23 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.