Lyn Squire

New ways of looking at old issues: inequality and growth

Abstract The paper uses new cross-country data on income and asset (land) distribution to show that (i) there is a strong negative relationship between initial inequality in the asset distribution and long-term growth; (ii) inequality reduces income growth for the poor, but not for the rich; and (iii) available longitudinal data provide little support for the Kuznets hypothesis. Policies that increase aggregate investment and facilitate acquisition of assets by the poor might thus be doubly beneficial for growth and poverty reduction.

Explaining International and Intertemporal Variations in Income Inequality

This paper explores the propositions that, income inequality is relatively stable within countries; and that it varies significantly among countries. A new and expanded data set provides broad support for both propositions. Drawing on a political economy and capital market imperfection arguments to explain the intertemporal and international variation in inequality, the empirical analysis shows that the predicted variables associated with the first argument (a measure of civil liberties and the initial level of secondary schooling) and the second argument (a measure of financial depth and the initial distribution of land) are indeed important determinants of inequality.

The simultaneous evolution of growth and inequality

Research on inequality and growth can be divided into two strands. One, deriving from Kuznets and Lewis, has tried to identify a mechanistic relationship between growth, or level, of income and inequality. The other has tried to find causal explanations of growth and inequality, treating each independently. In this paper, we draw from both strands to test whether growth and inequality are the joint outcomes of other variables and processes. We find that simultaneous examination of growth and inequality yields significantly different results and has different consequences for policy from previous independent studies. Copyright 2003 Royal Economic Society.

An econometric application of the theory of the farm-household

An econometric model of household production, consumption and labor supply behavior for a semicommercial farm with a competitive labor market is presented, using a Cobb-Douglas specification for the production function and a modified linear expenditure system. The model, estimated from primary, cross-sectional Malaysian data, is used to analyze the impact of migration, output price intervention and technological change on the agricultural sector. In doing so, the wage rate is treated as an endogenous variable to be determined by the interaction of aggregate labor demand and supply curves obtained from the estimated microfunctions. The policy significance of an integrated treatment of production and consumption decisions to the theory of the household is demonstrated. Mathematical models are included. 21 references.

A Model of an Agricultural Household in a Multi-Crop Economy: The Case of Korea

It is the purpose of this paper to describe one method of extending the empirical applicability of the theory of the farm-household to multi-crop economies by integrating the econometric and linear programming models already available in the literature. Section I introduces the subject. In Section II the theoretical model is presented. In Section III Korean data are used to assess the quantitative significance of the approach by calculating and comparing household response to changes in input and output prices for two different specifications of the models. First, the household is analyzed from the consumption side on the assumption that farm profits are exogenous; this corresponds to the standard approach in consumer demand theory. And second, results are presented for a model in which consumption and production responses are integrated in a theoretically consistent fashion, and farm profits are allowed to reflect production responses to price changes. The results from this and other studies that use an integrated approach to production and consumption decisions highlight the need to change perceptions concerning agricultural household response to economic incentives in developing countries and to revise the design of economic projects and policies accordingly.