Income Inequality and Macroeconomic Volatility: An Empirical Investigation

Richard Breen and Cecilia García‐Peñalosa
Authors registered in the RePEc Author Service: Cecilia Garcia-Penalosa

Review of Development Economics, 2005, vol. 9, issue 3, 380-398

Abstract: We explore the impact of macroeconomic volatility on the distribution of income. Using a cross‐section of developed and developing countries, we find that greater output volatility, defined as the standard deviation of the rate of output growth, is associated with a higher Gini coefficient and income share of the top quintile. The coefficients suggest that a strong effect on inequality resulting from a reduction in volatility: the Gini coefficient of a country like Chile would fall by 6 points if it were to reduce its volatility to the same level as Sweden or Norway. Our results seem not to be driven by the high‐inequality/high‐volatility Latin American countries.

Date: 2005
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https://doi.org/10.1111/j.1467-9361.2005.00283.x

Related works:
Working Paper: Income Inequality and Macroeconomic Volatility: an Empirical Investigation (1999)
Working Paper: Income Inequality and Macroeconomic Volatility: an Empirical Investigation (1999)
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