On the social welfare interpretation of growth incidence curves

Abstract

The Growth Incidence Curve (GIC), introduced in the poverty measurement literature by Ravallion and Chen (Econ. Lett. 78(1), 93–99, 2003), proved to be a valuable and widely used tool to analyze the impact of growth on poverty and its ‘pro-poorness’. Beyond pro-poorness, however, the relationship between the shape of GICs and social welfare is ambiguous. If a declining GIC, together with a positive overall rate of growth, is unambiguously associated with a social welfare gain, such a shape is not the most common and the reciprocal is not necessarily true. This paper analyzes the social welfare properties of GICs, as well as their non-anonymous counterpart (NAGICs), which describe how income growth depends on the initial rank of individuals in the initial income distribution. NAGICs thus account not only for the change in the distribution of income but also for income mobility, and differ conceptually from their anonymous counterpart. However, their social welfare interpretation proves to be very similar.

Dynastic Measures of Intergenerational Mobility

“…This literature, focusing again mainly on intra-generational mobility interpretations and applications, assumes that individual-level mobilities are represented by concepts of 'distance' between first and second-period incomes (Fields et al, 2002, van Kerm, 2009, Jenkins and van Kerm, 2016. It has been extensively used to characterize which segments of the population benefit the most from income growth using non-anonymous growth incidence curves (Grimm, 2007, Bourguignon, 2011, Van Kerm, 2009, Jenkins and Van Kerm, 2016, Palmisano, 2018, Lo Bue and Palmisano, 2020, Berman and Bourguignon, 2021. Our approach is related to this literature but adapted to the intergenerational perspective.…”

“…Further work could actually explore the link with recent studies on non-anonymous growth incidence curves (NAGIC), which are changes in levels (for instance income levels) of given dynasties while DynaC is a change in ranks Berman and Bourguignon (2021). suggest a decomposition of NAGIC into a mobility effect (reranking) and a shape effect (i.e.…”