The influence of macroeconomic factors on personal income distribution in developing countries: a parametric modelling approach

Abstract

This article examines the influence of macroeconomic factors on personal income distribution in developing countries using a parametric modelling approach. The technique is based on the selection and estimation of a theoretical parametric model (a Dagum distribution) which fits accurately to the empirical income distributions of the countries examined. The parameters of the model specifically related to inequality are subsequently used as dependent variables in econometric models in order to examine the impact that certain macroeconomic variables (GDP growth, inflation, employment and real interest rates) have on inequality. The results reveal that GDP growth, employment rate and real interest rate are the macroeconomic factors with greater impact in shaping personal income distribution in developing countries.