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Income inequality and social well-being

Working Paper 2015-380

Abstract

Deepening inequality has become the subject of intense debates, particularly on growth, poverty, and development. This paper shows that inequality has a bearing on well-being, which comprises a set of capabilities indicating the extent of freedom individuals have in leading their lives. It examines inequality in different dimensions of well-being across Brazilian municipalities and measures the impact of income inequality on well-being. Findings reveal that Brazil has improved outcomes related to material well-being, health, education, living conditions, and labor market activities, and has reduced disparities in these areas. The study finds that income inequality hampers growth in well-being, except for indicators closely associated with education and human capital development. Findings suggest that while the impacts of income inequality differ across various dimensions of well-being, reducing inequality will generally help improve the well-being of a society

Authors: Nanak Kakwani, Hyun H. Son.

Keywords: Income distribution, current account determinants, sectoral financial balances, global financial crisis.
JEL: D31, D33, E21, F41, G3.