Inequality, growth fluctuations, and employment

Burcu Hacibedel, Pierre Mandon, Priscilla Muthoora () and Nathalie Pouokam
Additional contact information
Burcu Hacibedel: International Monetary Fund
Pierre Mandon: World Bank
Priscilla Muthoora: International Monetary Fund
Nathalie Pouokam: International Monetary Fund

Empirical Economics, 2024, vol. 66, issue 2, No 4, 587-622

Abstract: Abstract This paper analyses how short-term fluctuations in economic growth affect inequality in developing countries. Using a sample of 71 countries, we find that, on average, growth upswings are associated with reductions in inequality. This reduction is, however, largely undone by growth slowdowns. A mediation analysis framework helps identify unemployment, especially youth unemployment, as the main channel through which fluctuations in growth affect the dynamics of inequality. These findings suggest that both the quality of jobs created, and labor market policies are important to ensure that growth outcomes are conducive to inequality reduction.

Keywords: Inequality; Growth; Developing countries; Mediation analysis (search for similar items in EconPapers)
JEL-codes: D63 O1 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s00181-023-02476-w

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