Estimation and Inference for Actual and Counterfactual Growth Incidence Curves

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dc.contributor.author Ferreira, Francisco H. G.
dc.contributor.author Galvao, Antonio F.
dc.contributor.author Firpo, Sergio
dc.date.accessioned 2017-01-30T17:08:18Z
dc.date.available 2017-01-30T17:08:18Z
dc.date.issued 2017-01
dc.identifier.uri http://hdl.handle.net/10986/25942
dc.description.abstract Different episodes of economic growth display widely varying distributional characteristics, both across countries and over time. Growth is sometimes accompanied by rising and sometimes by falling inequality. Applied economists have come to rely on the Growth Incidence Curve, which gives the quantile-specific rate of income growth over a certain period, to describe and analyze the incidence of economic growth. This paper discusses the identification conditions, and develops estimation and inference procedures for both actual and counterfactual growth incidence curves, based on general functions of the quantile potential outcome process over the space of quantiles. The paper establishes the limiting 0 distribution of the test statistics of interest for those general functions, and proposes resampling methods to implement inference in practice. The proposed methods are illustrated by a comparison of the growth processes in the United States and Brazil during 1995-2007. Although growth in the average real wage was disappointing in both countries, the distribution of that growth was markedly different. In the United States, wage growth was mediocre for the bottom 80 percent of the sample, but much more rapid for the top 20 percent. In Brazil, conversely, wage growth was rapid below the median, and negative at the top. As a result, inequality rose in the United States and fell markedly in Brazil. en
dc.language English
dc.language.iso en_US
dc.publisher World Bank, Washington, DC
dc.relation.ispartofseries Policy Research Working Paper;No. 7933
dc.rights CC BY 3.0 IGO
dc.rights.uri http://creativecommons.org/licenses/by/3.0/igo
dc.subject income distribution
dc.subject wage growth
dc.subject economic growth
dc.subject inequality
dc.subject potential outcome
dc.subject quantile process
dc.subject growth incidence curve
dc.subject inference
dc.title Estimation and Inference for Actual and Counterfactual Growth Incidence Curves en
dc.type Working Paper en
dc.rights.holder World Bank

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