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Growth, Inequality and Social Welfare: Cross-Country Evidence
June 24, 2014Inclusion and Shared Prosperity

Trends in income inequality have returned to the center of development policy discussions. In this policy research talk, Aart Kraay will provide new perspectives on these issues, based on his recent paper "Growth, Inequality and Social Welfare: Cross-Country Evidence."

Trends in income inequality have returned to the center of development policy discussions. This emphasis is apparent in many areas, from the slogans of the Occupy Wall Street movement, to the public debate stimulated by Thomas Piketty's book, to the Bank's own adoption of an inequality-sensitive shared prosperity target.

In this policy research talk, Aart Kraay will provide new perspectives on these issues, based on his recent paper "Growth, Inequality and Social Welfare: Cross-Country Evidence" (joint with David Dollar and Tatjana Kleineberg). Drawing on a variety of data sources, the authors use social welfare functions that assign weights to individuals based on their income levels to assess how much recent changes in inequality matter for welfare.

In a large panel of industrial and developing countries over the past 40 years, they document that most of the variation in changes in social welfare is driven by differences in average growth performance. In contrast, changes in inequality in either direction have on average had much smaller impacts on trends in social welfare. The presentation will relate these findings to the Bank's new shared prosperity goal, and to the broader debate on inequality and growth.


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    Aart Kraay, Senior Research Adviser, Research Department

    Aart Kraay is an economist in the Development Research Group at the World Bank. He joined the World Bank in 1995 after earning a Ph.D. in economics from Harvard University (1995), and a B.Sc. in economics from the University of Toronto (1990). His research interests include international capital movements, growth and inequality, governance, and the Chinese economy. His research on these topics has been published in scholarly journals such as the Quarterly Journal of Economics, the Review of Economics and Statistics, the Economic Journal, the Journal of Monetary Economics, the Journal of International Economics, and the Journal of the European Economic Association. He is an associate editor of the Journal of Development Economics, and is an adjunct professor at the School of Advanced International Studies at Johns Hopkins University. He has also held visiting positions at the International Monetary Fund and the Sloan School of Management at MIT.
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    Asli Demirgüç-Kunt, Director of Research

    Asli Demirgüç-Kunt is the Director of Research in the World Bank. After joining the Bank in 1989 as a Young Economist, she has held different positions, including Director of Development Policy, Chief Economist of Financial and Private Sector Development Network, and Senior Research Manager, doing research and advising on financial sector and private sector development issues.
  • Marcelo Giugale, Senior Director, Macroeconomics & Fiscal Management Global Practice

    Marcelo Giugale, a national of Argentina and Italy, is the Director for Poverty Reduction and Economic Management in the AFR Region, a position he has held since 2011. He has had managerial positions on both sides of the matrix and across networks, including as Country Director for the Andean Region, and as a dual PREM and FPD Director in LAC. He joined the Bank in 1989 as a Young Professional, and has been based both in Washington and in the field. His experience spans a number of roles, including Senior Economist, Principal Economist, and Lead Economist across four regions: AFR, ECA, LAC, and MNA. Marcelo has published books and articles on macroeconomic policy, finance, subnational fiscal rules, development economics, business, agriculture, and applied econometrics. Notably, he was the chief editor of collections of policy notes published for the presidential transitions in Mexico (2000), Colombia (2002), Ecuador (2003), Bolivia (2006) and Peru (2006). Under his leadership, the Bank pioneered innovations such as the first subnational budget-support operation (in Mexico; 2000); the "Listening to Latin America" and "Listening to Africa" initiatives, using cell-phones to conduct continuous household surveys; the Africa Gender Lab, a unique impact evaluation unit; and the Human Opportunity Index. He has taught at the American University in Cairo, the London School of Economics (LSE), and the Universidad Católica Argentina. He holds a PhD and MSc in Economics from LSE and a Bachelor’s in Economics from Universidad Católica Argentina.
  • The Policy Research Talks showcase the latest findings of the research department and their implications for World Bank operations. The goal of the monthly event is to facilitate a dialogue between researchers and operational staff, so that we can challenge and contribute to the World Bank's intellectual climate and re-examine conventional wisdom in current development theories and practices.