A Characterisation and an Application to the Economic Crisis in Italy
Working Paper Series History dependent growth incidence: A characterisation and an application to the economic crisis in Italy Flaviana Palmisano Dirk Van de gaer ECINEQ WP 2013 - 314 ECINEQ 2013 - 314 November 2013 www.ecineq.org History dependent growth incidence: A characterisation and an application to the economic crisis in Italy∗ Flaviana Palmisanoy University of Bari, Italy Dirk Van de gaer Sherppa, Ghent University, IAE and CORE, Belgium Abstract We propose a characterisation of an aggregate measure of growth that takes into account the initial economic conditions of individuals. Our measure is a weighted average of individual 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 in the last decade and find that the 2008-2010 crisis deteriorated the income growth of the initially poor disproportionately. This is compatible with the dual nature of the Italian labour market. Keywords: Individual income growth, directional income mobility, pro-poor growth, eco- nomic crisis. JEL Classification: D31, D63, I32. ∗We thank Paolo Brunori, Thomas Demuynck, Fran¸cois Maniquet, Vito Peragine, Xavi Ramos and Philippe Van Kerm for useful comments and suggestions. We gratefully acknowledge comments received on prelimi- nary versions presented at Universitat Autonoma de Barcelona, Ghent University, CORE, CIRPEE, the Fifth ECINEQ meeting (Bari, 22-24/07, 2013), the VI workshop of the GRASS and VI Academia Belgica-Francqui Foundation conference (Rome, 10-12/09, 2012), and the Second World bank Conference on Equity: Inequality of What? Outcomes, opportunities and Fairness (Washington, 26-27/06/2012).
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