ABSTRACT
In the previous chapter; Muller raised a number of questions about the validity of data used to measure income inequality. In this selection, drawn from a longer essay on the relationship between development and income distribution, William Loehr discusses the weaknesses of the data. He points out the serious limitations of family income data that have been used in nearly all prior studies and suggests that a more reliable measure of income distribution would be based upon the individual. Studies using such a measure would probably reveal even greater levels of inequality in developing countries than have existing studies, Loehr says. He then discusses the utility of examining sectoral income distribution data and concludes by looking at a number of policy instruments that can be employed in developing countries to reverse the trend toward greater income inequality.
