Evaluating Patterns of Income Growth when Status Matters: A Robust Approach

Abstract

This paper addresses the problem of ranking growth episodes from a microeconomic perspective. While most of the existing criteria, framed in the pro-poor growth tradition, are either based on anonymous individuals or are used to identify them on the basis of their status in the initial period, this paper proposes new criteria to evaluate growth, which are robust to the choice of the reference period used to identify individuals. Suitable dominance conditions that can be used to rank alternative growth processes are derived by means of an axiomatic approach. Moreover, the theoretical results are used to rank the different growth episodes that have taken place in the past decade in Australia, Germany, Korea, Switzerland, and the U.S.