Income distribution, social cohesion and economic resilience

Abstract

The distribution of income has major implications regarding the social and economic development of a country. In particular, this is expected to impinge upon the extent of social cohesion, and, as a result, on the social development of a country, which, according to Briguglio et al. (2006), is in turn a fundamental component of the Economic Resilience Index (ERI). However the methodology adopted by Briguglio et al. in measuring social development within the economic resilience framework makes no explicit use of an income distribution variable. This chapter assesses the benefits of including an income distribution variable in the ERI, and utilises the Cini Coefficient for this purpose. The chapter concludes that although the Cini Coefficient possesses a number of desirable characteristics as a component of the ERI, its inclusion in the Index poses additional computational burdens and leads to a "loss" of countries due to lack of data for these countries, without significantly affecting the rankings of countries in the Index.