The robustness of population-weighted individual income distribution dynamics = The robustness of population-weighted individual income distribution dynamics

다국어 초록 (Multilingual Abstract)

The recent literature on ‘global income distribution’ has recently focused on ‘individual income inequality’ to account for the so-called China effect. We examine the robustness of various population weighting schemes that account for different country sizes in the study of income distribution dynamics. We apply our test of stochastic stability to within as well as between-country income distribution dynamics and find that the middle-income group’s role in income distribution dynamics vanishes when we allow for very high population weights for China and India. Following a more robust procedure that caps the weights of countries with excessively large populations, we recover the stable middle-income group during some sub-periods of our sample. We argue that giving China and India weights proportional to their populations allows these two high-leverage points to dominate all other sources of income distribution dynamics.