Cross-Country Variability in Inequality Change

Abstract

Due to the availability of international and longitudinal data and sophisticated statistical applications, it has been possible to examine cross-country inequality changes from many different angles. In most studies, however, the variability of inequality across countries and years has been taken into account in a limited sense. This paper re-examines the findings of Galbraith and Kum (2005) and makes clear the implications of the assumptions on which the statistical models depend. As a general conclusion, inequality appears closely related to the sectoral share of employment in the overall state of economic development, and this finding appears robust even with various assumptions on cross-country variability in intercept and coefficients of covariates.