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Has the Income Share of the Middle and Upper-middle Been Stable around the ‘50/50 Rule’, or Has it Converged towards that Level? The ‘Palma Ratio’ Revisited
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Has the Income Share of the Middle and Upper-middle Been Stable around the ‘50/50 Rule’, or Has it Converged towards that Level? The ‘Palma Ratio’ Revisited

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  • José Gabriel Palma

Abstract

type="main"> In an article published in this journal in 2011, an alternative measure of inequality was suggested, which has subsequently become known as ‘the Palma Ratio’. In this new article, the author of the original proposal revisits the argument for such a measure. Using new data, he examines whether the current remarkable homogeneity in the income share of the middle and upper-middle around the world — the foundation of the so-called ‘Palma Ratio’ — is an historically stable stylized fact, or whether it is a new phenomenon, the outcome of a process of convergence towards the current ‘50/50 Rule’ (in which half of the population in each country located within deciles 5 to 9 tends to appropriate about 50 per cent of the national income, or just above). Although partly written in response to a comment on the 2011 paper (published in this issue), the article also makes a substantive further contribution to the literature on inequality and the statistics to measure it.

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  • José Gabriel Palma, 2014. "Has the Income Share of the Middle and Upper-middle Been Stable around the ‘50/50 Rule’, or Has it Converged towards that Level? The ‘Palma Ratio’ Revisited," Development and Change, International Institute of Social Studies, vol. 45(6), pages 1416-1448, November.
    • Handle: RePEc:bla:devchg:v:45:y:2014:i:6:p:1416-1448
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    References listed on IDEAS

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    1. José Gabriel Palma, 2009. "The revenge of the market on the rentiers," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 33(4), pages 829-869, July.
    2. Anne O. Krueger, 1983. "Trade and Employment in Developing Countries, Volume 3: Synthesis and Conclusions," NBER Books, National Bureau of Economic Research, Inc, number krue83-1.
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    8. Atkinson, A B, 1997. "Bringing Income Distribution in from the Cold," Economic Journal, Royal Economic Society, vol. 107(441), pages 297-321, March.
    9. William R. Cline, 1997. "Trade and Income Distribution," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 58.
    10. Robert Rowthorn, 2014. "A note on Piketty’s Capital in the Twenty-First Century," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 38(5), pages 1275-1284.
    11. Acemoglu,Daron & Robinson,James A., 2006. "Economic Origins of Dictatorship and Democracy," Cambridge Books, Cambridge University Press, number 9780521855266.
    12. Alex Cobham & Andrew Sumner, 2013. "Is it all about the tails? The Palma measure of income inequality," Working Papers 308, ECINEQ, Society for the Study of Economic Inequality.
    13. Palma, J.G., 2009. "The Revenge of the Market on the Rentiers: Why neo-liberal Reports of the end of history turned out to be premature (Updated 19 December 2011)," Cambridge Working Papers in Economics 0927, Faculty of Economics, University of Cambridge.
    14. Acemoglu,Daron & Robinson,James A., 2009. "Economic Origins of Dictatorship and Democracy," Cambridge Books, Cambridge University Press, number 9780521671422.
    15. Anne O. Krueger, 1983. "Trade and Employment in Less Developed Countries: The Questions," NBER Chapters, in: Trade and Employment in Developing Countries, Volume 3: Synthesis and Conclusions, pages 1-9, National Bureau of Economic Research, Inc.
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    Cited by:

    1. I. Josa & A. Aguado, 2020. "Measuring Unidimensional Inequality: Practical Framework for the Choice of an Appropriate Measure," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 149(2), pages 541-570, June.
    2. Collin Constantine, 2022. "Income Inequality in Guyana: Class or Ethnicity? New Evidence from Survey Data," Working Papers 631, ECINEQ, Society for the Study of Economic Inequality.
    3. Constantine, Collin, 2024. "Income inequality in Guyana: Class or ethnicity? New evidence from survey data," World Development, Elsevier, vol. 173(C).
    4. Emine TAHSİN, 2019. "An Investigation of the Palma Ratio for Turkey Both on National and Regional Level," Sosyoekonomi Journal, Sosyoekonomi Society, issue 27(41).
    5. Lourdes ROJAS RUBIO, 2022. "Inequality, Corruption and Support for Democracy," THEMA Working Papers 2022-20, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    6. García-García, Pablo & Buendía, Luis & Carpintero, Óscar, 2022. "Welfare regimes as enablers of just energy transitions: Revisiting and testing the hypothesis of synergy for Europe," Ecological Economics, Elsevier, vol. 197(C).
    7. Clément, Matthieu & Rougier, Eric & Berrou, Jean-Philippe & Combarnous, François & Darbon, Dominique, 2022. "“What’s in the middle”: Scratching beneath the surface of the middle class(es) in Brazil, Côte d’Ivoire, Turkey and Vietnam," World Development, Elsevier, vol. 158(C).
    8. Alex Cobham & Luke Schlogl & Andy Sumner, 2015. "Inequality and the Tails: The Palma Proposition and Ratio Revisited," Working Papers 143, United Nations, Department of Economics and Social Affairs.
    9. Nicolás Valenzuela‐Levi, 2020. "Waste Political Settlements in Colombia and Chile: Power, Inequality and Informality in Recycling," Development and Change, International Institute of Social Studies, vol. 51(4), pages 1098-1122, July.
    10. Arief Anshory Yusuf & Peter Warr, 2018. "Anti-globalisation, poverty and inequality in Indonesia," Departmental Working Papers 2018-03, The Australian National University, Arndt-Corden Department of Economics.
    11. Valenzuela-Levi, Nicolás, 2021. "The rich and mobility: A new look into the impacts of income inequality on household transport expenditures," Transport Policy, Elsevier, vol. 100(C), pages 161-171.
    12. Tomás, Manuel & García-Muros, Xaquín & Alonso-Epelde, Eva & Arto, Iñaki & Rodríguez-Zúñiga, Alejandro & Monge, Cristina & González-Eguino, Mikel, 2023. "Ensuring a just energy transition: A distributional analysis of diesel tax reform in Spain with stakeholder engagement," Energy Policy, Elsevier, vol. 177(C).
    13. Petra Sauer & Narasimha D. Rao & Shonali Pachauri, 2020. "Explaining income inequality trends: An integrated approach," WIDER Working Paper Series wp-2020-65, World Institute for Development Economic Research (UNU-WIDER).
    14. Tahsin, Emine, 2019. "Concentration of income inequality on the basis of Palma ratio and income deciles of Turkey on national and regional level," MPRA Paper 92490, University Library of Munich, Germany.

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