APL (Ajiken Power Lunch)

APL (Ajiken Power Lunch) is a lunchtime workshop open to public, including IDE staffs, visiting research fellows, IDEAS students, outside researchers and graduate students. This workshop provides a platform for presentation of any work in progress where we can discuss in either English or Japanese.

Those who would attend a seminar are asked to announce yourself to receptionists on your arrival at the IDE and to obtain APL Organizers' signature on your admission card after the seminar.

January 27, 2017. (Friday) 10：30-12：00

Institute of Developing Economies, Japan External Trade Organization C23 Meeting Room 　

Which Tail Matters? Inequality and Growth in Brazil

We estimate the effect of initial income inequality on subsequent income per capita growth using sub-national data from Brazil over the period 1970-2000. Controlling for initial income per capita and other standard confounders, we find that places with higher initial inequality exhibit higher subsequent growth. This effect is entirely driven by the lower tail of the initial income distribution: places with a higher share of income going to the middle quintile at the expense of the bottom quintile grow more rapidly, while places with a higher share of income going to the top quintile at the expense of the middle quintile get no growth boost at all. We document that physical and human capital accumulation in places with higher inequality in the lower tail of the initial income distribution outpace capital accumulation in more equal places, while inequality in the upper tail of the distribution is uncorrelated with subsequent physical or human capital growth. These results are consistent with credit constraints and setup costs for human and physical capital investments as well as an increasing and concave individual propensity to save.

Professor Stephan Litschig (National Graduate Institute for Policy Studies (GRIPS))

Yuya KUDO

English