On Trends I N the Gap between Rich and Poor in Less Developed Countries: Why We Know

This paper considers the problems involved in measuring trends over time in inequality in less developed countries. After considering some of the conceptual problems involved in choosing a measure of economic welfare, the period it should cover, and the statistical units to which it should be applied, the paper goes on to draw up a list of minimum data requirements for reaching reliable conclusions about such trends. It concludes that in many countries the available information falls well short of the minimum list, and it explores various sources of indirect evidence on trends in distribution. The central argument is that the available data permit no easy tests for trends in the level of economic inequality in less developed countries. At present, the best bet is to complement evidence on income distribution with available data on consumption distribution and on wage trends and production aggregates by occupational and sectoral groups. Inconsistencies will highlight problem areas, and their reconciliation should provide a firmer foundation on which to draw conclusions about distributional trends.