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IMF Standby Agreements and Inequality: The Role of Informality

Year: 2025

Type: article

Abstract: ABSTRACT We use a relatively large annual (unbalanced) cross‐country panel data set that includes the Gini index and the estimated household income inequality as the two relevant inequality metrics and covers the period from 1950 to 2018 for 159 countries, and we investigate the response of two inequality metrics to International Monetary Fund (IMF) standby programs. Our empirical analysis indicates that in countries where the informal sector size (as % GDP) is relatively larger, the extent of income inequality increases after IMF standby agreements. We also show that the opposite is true when the informal sector size is small, that is, inequality declines after these IMF programs.

Source: Review of Development Economics

DOI: 10.1111/rode.13192

Authors: Ceyhun Elgin, Adem Yavuz Elveren

Institutions: Boğaziçi University, İzmir University of Economics, Fitchburg State University

Language: English

Topic: Income, Poverty, and Inequality

Subfield: Sociology and Political Science

Field: Social Sciences

Domain: Social Sciences

SDGs: No poverty, Decent work and economic growth, Reduced inequalities, Partnerships for the goals

Open Access status: hybrid

Estimated APC paid: $3,350