Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/216515 
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper No. 8119
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We provide an interesting empirical evidence dealing with the cross country data on equality i.e. movements of Gini coefficient over last four decades. This seems to suggest a robust empirical evidence that the growth or change in inequality across nations has a negative relation with initial degree of inequality. This would imply that poorer nations starting with higher degree of inequality experience weaker growth in inequality, exhibiting some sort of convergence in the inequality generating process. With this evidence as the backdrop we then provide an analytical framework where countries make an effort to neutralize the distributional impact with taxes and transfers that might distort incentives. We prove, under fairly general conditions, that ceteris paribus, lower initial inequality makes it tougher for a country to contain further inequality. Thus cross country inequality is likely to exhibit a converging process.
Subjects: 
inequality
distribution-neutral
fiscal policy
JEL: 
H23
D37
Document Type: 
Working Paper
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