This paper studies growth and inequality in China and India—two economies that account for a third of the world’s population. By modelling growth and inequality as components in a joint stochastic process, the paper calibrates the impact each has on different welfare indicators and on the...

Many observers suspect economic growth to be inextricably associated with inequality: growth alone need not bring about unalloyed, uncontroversial increases in economic well-being because rising average income levels might come together with increasing disparities between rich and poor....