2014

When More Poor Means Less Poverty: On Income Inequality and Purchasing Power

Särtryck nr 2014:36

Författare: Andreas Bergh och Therese NilssonÅr: 2014 Publikation: Southern Economic Journal Årgång (nr): 81 (1) Sidor: 232–246
Artikeln online (behörighet kan krävas)
Preliminär version


We show theoretically that the poor can benefit from price changes induced by higher income inequality. As the number of poor increases, the market for products aimed toward the poor grows, and such products become more profitable. As a result, there are circumstances where an increase in income inequality associates with higher purchasing power of the poor. Using cross-country data on the price of one kilogram of rice and the price of a Big Mac hamburger, we confirm a negative association between income inequality and the price of inferior goods, robust to the inclusion of a large set of control variables. Results are also robust to a first difference specification and to a two-stage instrumental variables approach. Examining economic well-being, it is thus important to analyze not only the incomes of households, but also the prices of the products and services that they buy.


Referens:
Bergh, Andreas och Therese Nilsson (2014), "When More Poor Means Less Poverty: On Income Inequality and Purchasing Power". Southern Economic Journal 81(1), 232–246.

Andreas Bergh

Kontakt

Mobil: 070 779 0734
andreas.bergh@ifn.se

Therese Nilsson

Kontakt

Tel: 046 222 4643
Mobil: 073 396 7919
therese.nilsson@nek.l...

Aktuell forskare

Henrik Horn

Forskningsområden: Internationella handels- och investeringsavtal, konkurrenspolitik och marknadsregleringar

Några av de frågor Henrik Horn försöker besvara i sin forskning:

  • Hur ska centrala delar av WTO-avtalet tolkas?
  • Hur bör EU:s miljöpolitik utformas?

IFN kalendarium

Institutet för Näringslivsforskning, Grevgatan 34 - 2 tr, Box 55665, SE-102 15 Stockholm, Sweden | Tel: +46-(0)8-665 45 00 | info@ifn.se