Inequality in Asia and the Pacific : trends, drivers and policy implications

List of figures . . x
List of tables . . xiv
List of boxes . . xvii
Notes on contributors . . xviii
Foreword . . xx
Preface . . xxi
Abbreviations . . xxiv

1 Introduction . . 1
Asia's rising inequality amid rapid economic growth . . 1
Inequality of outcome versus inequality of opportunity . . 2
Why rising inequality matters . . 5
Summary of key findings . . 11

PART I - Regional overview and synthesis . . 19

2 Asia's income inequalities: recent trends . . 21
Data sources and estimation methods . . 21
Recent trends of income inequality in developing Asia . . 23
Asia's inequality in a global context . . 31
Summary . . 35

3 What drives Asia's rising inequality? . . 37
A framework of thinking about income inequality . . 37
Key drivers of rising inequality in Asia . . 38
Increasing skill premiums . . 42
Declining share of labor income . . 44
Spatial inequality . . 48
Summary . . 55

4 Inequality of human opportunities in developing Asia . . 58
Introduction . . 58
Human Opportunity Index . . 59
Contribution of individual circumstance variables . . 60
Empirical analysis . . 61
Contribution of circumstance variables to inequality of opportunity . . 64
Conclusions . . 74

5 Confronting Asia's rising inequality: policy options . . 79
Introduction . . 79
Efficient fiscal policy . . 81
Reducing regional inequality . . 89
Making growth more employment-friendly . . 92
Toward inclusive growth in Asia . . 97

PART II - Background studies . . 101

6 Inclusive growth and gender inequality in Asia's labor markets . . 103
Introduction . . 103
Links between economic growth and gender inequality . . 104
Gender inequality in Asian labor markets: macro-level evidence . . 108
Drivers of women's labor force participation: micro-level evidence . . 116
Conclusions and policy implications . . 126

7 Structural change and inequality: a conceptual overview with reference to developing Asia . . 134
Introduction . . 134
Conceptual overview of the relationship between inequality and structural change . . 136
Inequality-structural change nexus in the advanced economies . . 141
Analytical review of the inequality-structural change nexus in developing Asia . . 145
Concluding observations and policy implications . . 150

8 Institutions and economic inequality in Asia: disentangling policy and political structure . . 156
Introduction . . 156
Democracy and Inequality . . 159
Labor/wage rules and inequality . . 162
Asian inequality . . 163
The special case of land reform and inequality . . 166
The urban-rural gap . . 167
Unexamined assumptions . . 168
Conclusion and future challenges . . 169

9 Government fiscal policies and redistribution in Asian countries . . 173
Introduction . . 173
Review of the literature on the effectiveness of redistributive fiscal policies . . 173
Empirical estimates of the impact of fiscal policies on income inequality in Asia . . 181
Improving the effectiveness of fiscal policies in Asia . .186
Conclusions and policy lessons . . 197

10 Commitment to equity: a diagnostic framework to assess governments' fiscal policy . . 202
Introduction: what is the Commitment to Equity Assessment? . . 202
A diagnostic framework . . 203
Definitions and data requirements . . 209
An assessment of fiscal policies and redistribution in Brazil . . 214
Conclusion . . 222

11 Growth policy/strategy and inequality in developing Asia . . 228
Introduction . . 228
Inclusive growth policy/strategy: a comparison of the People's Republic of China and India . . 229
In-depth analysis of inequality-growth nexus in the case of the Repubic of Korea . . 240
Concluding observations and policy implications . . 252

12 A note on the middle class in Latin America . . 257
Introduction . . 257
Why another note on the middle class . . 258
What constitutes a middle-class society? . . 261
Some characteristics of the Latin American and Caribbean middle class . . 267
Concluding reflections . . 283

13 Urbanization and inequality in Asia . . 288
Introduction . . 288
Inequality index, data, and basic trends . . 289
Accounting for changes in national inequality . . 292  
Urbanization and the turning point . . 295
Summary and conclusions . . 301

14 Inequality in Southeast Asia . . 303
Introduction . . 303
Recent trends of inequality in Southeast Asia . . 304
Dimensions of inequality . . 306
Structural and policy drivers of inequality in Southeast Asia . . 312
Recent policy developments . . 321
Policy lessons . . 325

15 Income inequality and redistributive policy in the People's Republic of China . . 329
Introduction . . 329
Data and methodology . . 330
Dimensions of the People's Republic of China's income inequality . . 332
Determinants of inequality: regression-based decomposition . . 335
Recent government policies addressing income inequality . . 337
Conclusions and policy implications . . 347

16 Drivers of inequality in Pakistan . . 351
Introduction . . 351
Recent trends of income and non-income inequality . . 351
Decomposition of inequality . . 357
Structural and policy drivers of inequality . . 360
Recent policy developments in reducing inequality . . 365
Policy lessons . . 370

17 Accounting for inequality in India: evidence from household expenditures . . 373
Introduction . . 373
Data . . 376
Poverty and inequality in India: 1983 to 2004 . . 377
Accounting for inequality between 1993 and 2004 . . 381
Concluding remarks . . 402

Index . . 408