Cross-Country Income Levels over Time: Did the Developing World Suddenly Become Much Richer?
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Abstract
The latest global survey on relative prices and income levels, for the year 2011, showed changes to relative income levels that were larger in lower income countries, thereby narrowing the world income distribution compared to estimates based on the previous, 2005, survey. This paper examines whether changes in measurement methodology between the 2005 and 2011 survey can explain these large differences. We construct a counterfactual set of relative prices for 2005 that harmonizes measurement, and we no longer find systematic differences across income levels, implying that international income inequality based on the 2005 survey was overstated.Citation
Inklaar, Robert, and D. S. Prasada Rao. 2017. "Cross-Country Income Levels over Time: Did the Developing World Suddenly Become Much Richer?" American Economic Journal: Macroeconomics, 9 (1): 265-90. DOI: 10.1257/mac.20150155Additional Materials
JEL Classification
- C82 Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
- D31 Personal Income, Wealth, and Their Distributions
- E01 Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
- E23 Macroeconomics: Production
- E31 Price Level; Inflation; Deflation
- O11 Macroeconomic Analyses of Economic Development
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