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Divergence, Big Time
Author(s) -
Lant Pritchett
Publication year - 1997
Publication title -
the journal of economic perspectives
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 9.614
H-Index - 196
eISSN - 1944-7965
pISSN - 0895-3309
DOI - 10.1257/jep.11.3.3
Subject(s) - economics , per capita income , divergence (linguistics) , per capita , standard deviation , demographic economics , total personal income , income distribution , inequality , statistics , gross income , demography , population , mathematics , public economics , mathematical analysis , linguistics , philosophy , sociology , tax reform , state income tax
Historical data are unnecessary to demonstrate that perhaps the basic fact of modern economic history is massive absolute divergence in per capita income across countries. A plausible lower bound on per capita income can be combined with estimates of its current level in the poorer countries to place an upper bound on long-run income growth. Between 1870 and 1990, the ratio of richest to poorest countries' income increased from roughly 9 to 1 to 45 to 1, the standard deviation of (natural log) per capita income doubled, and the average income gap between the richest and all other countries grew nearly tenfold from $1,286 to $12,000.

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