Income Distribution, Growth and Wellbeing : Evidence of a Quantitative Approach for Selected OECD Countries
In this paper we provide evidence on the cross-country and intertemporal dynamics of aggregate welfare. Firstly, we apply and compare alternative inequality indexes to have an insight on the actual within-country income distribution. The same measures, combined with information on average incomes, are then used to quantify the impact of inequality on social welfare and to obtain a comparative assessment of well-being levels, determined according to Bernoulli’s hypothesis, across space and time. The empirical application has been carried out on 10 selected OECD countries for the period 1970-2000, using a dataset that combines comparable data on per capita incomes from Penn World Tables with income distribution information drawn from the World Income Inequality Database. The results obtained highlight how inequality-accounting welfare measures significantly modify the perception of well-being, affecting both the within-country evolution of aggregate welfare and inter-countries well-being levels. Finally, for selected sub-periods, the issue of progressivity of income growth process has been considered to evaluate whether or not income growth leads to lower inequality over time. (original abstract)
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