Purpose

This workshop will analyze the drivers of, and recommend solutions to, income inequality in Asia. While studies typically focus on advanced countries and look at the income of the very rich, this project investigates a more diverse group of Asian economies and pays particular attention to urbanization, financial inclusion, housing prices, education opportunities, and their impacts on income inequality.

Background

Asia’s rapid economic growth in recent decades has greatly helped reduce poverty but also been accompanied by a widening income gap in many countries. Zhuang, Kanbur, and Maligalig (2014) write that the Asia-wide Gini coefficient rose at an annual rate of 1.4% from 0.39 in the mid-1990s to 0.46 in the late 2000s; 14 of 37 Asian economies now have a Gini coefficient of 0.40 or greater, widely considered the threshold for “high inequality”. Although the Gini coefficients in developing Asia are on average lower than in Sub-Saharan Africa, Latin America, and the Caribbean, inequality is greater: 12 of 30 Asian developing economies, covering 82% of the region’s population, saw a worsening of the Gini coefficient in the past 2 decades, with the most pronounced increase in the People’s Republic of China and Indonesia.

The global financial crisis once again demonstrates that growing inequality is one of the biggest social, economic, and political challenges of our time. A Pew Research Center (2014) survey found that more than 60% of respondents worldwide regard the gap between rich and poor as a major concern. Recent IMF research shows that income inequality impedes growth, causes crises, and weakens demand (IMF 2015; Berg and Ostry 2011; Ostry, Berg, and Tsangarides 2014). Specifically, a 1 percentage point increase in the income share of the top 20% is associated with 0.08 percentage point lower GDP growth in the following 5 years. In contrast, the same percentage increase in the income share of the bottom 20% is related to 0.38 percentage point higher growth. The negative relationship between inequality and growth may be attributed to two reasons: (i) a higher concentration of income reduces the possibility of lower-income households staying healthy and being able to access tertiary education, and (ii) an enlarged income gap undermines growth by dampening aggregate demand because the consumption propensity at the top is much lower than at middle- and lower-income groups. A growing body of research has demonstrated the causal effects of a prolonged period of rising inequality on crises (Kumhof and Ranciere 2015; Kumhof et al. 2012).

Rising inequality also hampers poverty reduction. The Asian Development Bank (2012) says that “if inequality had remained stable in the Asian economies where it increased, the same growth in 1990–2010 would have taken about 240 million more people out of poverty—equivalent to 6.5% of developing Asia’s population in 2010 and 8.0% of those countries with rising inequality.” Growing disparities can entail huge social costs by undermining education and occupational choices, damaging trust, and eroding social cohesion.

Income inequality is not just an important dimension of development but has important implications for governments’ efforts to fight against poverty, sustain growth, and maintain social cohesion.

Objectives

To encourage scholars to present their research on the drivers of income inequality in Asia. The participants will include members of the core study team and other resource persons who will comment on various draft reports, including the following:

  • Preliminary drafts of research papers: 2 weeks before the workshop/conference
  • Revised drafts of the conference papers: 1 month after the workshop/conference

Participants

Conferences/workshops with experts, academics, and policy makers.

Output

Various research papers, to be published as ADBI working papers and in a special journal issue.

How to register

By invitation only.

Language

English

Partners

Asian Development Bank

Time of event

Day 1: 09:30 - 18:15
Day 2: 09:30 – 17:30

Event Contact

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