Thursday, December 03, 2009

Poverty and Inequality of Distribibution of Income

The Economist published this graph, citing a recent study by World Bank economist Martin Ravallion. Of course, the most important information in the figure is that all three of the BRIC countries have reduced poverty levels significantly over the past couple of decades. But I notice that there seems to be a correlation between the Gini index and the poverty level. The higher the Gini index (and thus the more unequal the distribution of income) the fewer people there were living under the poverty line in these three countries. Any economists out there, comments would be welcome about how and why that correlation exists.

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