The Welfare Implications of Growth Regressions.
Regressions relating the growth rate in income to initial income have been the soruce of much recent debate in growth economics. recent reserch has empasised the importance of allowing for non-linearities in these models when explaining the evolution of income over time. In this paper we argue these extended growth regressions are also useful in facilitating welfae comparisions across income distributions, in a way that is not possible using alternative measures of convergence. To do this we exploit the similarities between the income convergence literature and work on tax progressivity in the public finance literature. We illustrate our approch using both regional dta across the United States, Japan and Europe and conutrwide comparisions.
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