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

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

Therese Nilsson

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

Aktuell forskare

Niclas Berggren

Forskningsområden: Institutionell och politisk ekonomi; tillit, tolerans och religion; skönhetens betydelse i politiken.

Några av de frågor Niclas Berggren försöker besvara i sin forskning:

  • Hur påverkar t.ex. tillit, tolerans och religion ekonomins funktionssätt?
  • Finns det ett samband mellan graden av marknadsekonomi och sociala variabler (som tillit och tolerans)?

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