Income Inequality in Small States and the Caribbean: Stylized Facts and Determinants

Arnold McIntyre, Takuji Komatsuzaki and Jose P Mauricio Vargas

No 2021/036, IMF Working Papers from International Monetary Fund

Abstract: Rising income inequality has emerged as a major policy issue facing policymakers, but there is a dearth of empirical work on inequality in small states, including the Caribbean. Despite data limitations, the empirical analysis using a sample of small states finds that increased openness and deeper economic integration including financial market openness is associated with lower income inequality, whereas elevated debt levels limit fiscal space and are associated with higher income inequality. An important policy implication is that well targeted social sector spending aimed at improving education and health indicators will support increased redistribution and reduce income inequality.

Keywords: Small States; economic development; globalization; Gini at market income; absolute redistribution and income redistribution policies.; WP; market Gini coefficient; redistribution policy; market income; FDI inflow; Caribbean dummy variable; idiosyncratic income shock (search for similar items in EconPapers)
Pages: 22
Date: 2021-02-12
New Economics Papers: this item is included in nep-cwa
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