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Evaluating patterns of income growth when status matters

Working Paper 2015-375

Abstract

This paper addresses the problem of ranking growth episodes from a microeconomic perspective. While most of the existing criteria, framed in the pro-poor growth tradition, are either based on anonymous individuals or use to identify them on the base of their status in the initial period, this paper proposes new criteria to evaluate growth, which are robust to the choice of the reference period used to identify individuals. Suitable dominance conditions that can be used to rank alternative growth processes are derived by means of an axiomatic approach. Moreover, the theoretical results are used to rank the different growth episodes that took place in the last decade in Australia, Germany, Korea, Switzerland, and US.

Authors: Flaviana Palmisano.

Keywords: growth, income mobility, inequality, social welfare, pro-poorness.
JEL: D31, D63, D71.