History-dependent growth incidence: a characterization and an application to the economic crisis in Italy

Abstract

We propose a characterization of an aggregate measure of growth that takes into account the initial economic conditions of individuals. Our measure is a weighted average of individuals' income growth with weights that are decreasing with the rank of the individual in the initial income distribution. We apply our theoretical framework to evaluate the growth processes experienced by the Italian population. Even when we correct for the differences in mean income growth, and focus on the distribution of growth only, the 2008-2010 growth process was the worst of the last decade.

The Individual Poverty Incidence of Growth

“…More recently, the literature has started to move from the study of the distribution of quintile‐specific growth rates to the analysis of individual‐specific growth rates and of individual transitions between two distributions. This has been done by relaxing the axiom of anonymity (see inter alia Grimm, 2007; Van Kerm, 2009; Bourguignon, 2011; Palmisano and Peragine, 2015; Jenkins and Van Kerm, 2016; Palmisano and Van de Gaer, 2016) with the conceptualization of non‐anonymous GICs (na‐GIC, or mobility profiles) introduced independently by Grimm (2007), Van Kerm (2009), and Bourguignon (2011). The na‐GIC measures the individual‐specific rate of economic growth between two points in time, thus plotting the income trajectories of all the individuals which were in the same initial position, independently of the position they acquire in the final distribution of income.…”

“… See Palmisano and Peragine (2015); Jenkins and Van Kerm (2016); Palmisano and Van de Gaer (2016) for application of this weight in the context of growth evaluation. …”

Evaluating Patterns of Income Growth when Status Matters: A Robust Approach

“…In the present paper, we consider Australia, Germany, Korea, Switzerland, and the U.S. In particular, we consider the 2001, 2002, and 2010waves for Australia, Germany, and Switzerland, 1999, 2000, 2007, and 2008 wave available) for Korea, and 1999Korea, and , 2001Korea, and , 2007Korea, and , and 2009 (the last wave available) for the U.S. 7 For application of this weight in the context of growth evaluation, see Jenkins and Van Kerm (2011), Palmisano and Peragine (2015), and Palmisano and Van de gaer (2016). 8 Note that the content of this empirical illustration is purely descriptive, as the main aim of this section is to show how our framework can be applied on real data.…”

“…In order to overcome this issue, a non-anonymous approach has recently been proposed, which relaxes the anonymity assumption and evaluates growth processes on the basis of individuals growth experiences and their identities (see, among others, Jenkins and Van Kerm, 2006;Grimm, 2007;Bourguignon, 2011;Palmisano and Peragine, 2015;Palmisano and Van de gaer, 2016;Dhongde and Silber, forthcoming). In this approach, the identity of individuals is defined on the basis of their status, namely their position in the initial distribution of income.…”