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Changes in the Distribution of Income and the New Economic Model in Jamaica


King, Damien & Handa, Sudhanshu (2001). Changes in the Distribution of Income and the New Economic Model in Jamaica. Social and Economic Studies, 50(1), 127-168.


It is now a stylised fact of reform programmes that income distribution worsens in the immediate aftermath of the implementation of such reforms. In addition, the preponderance of evidence from the Latin American/Caribbean region suggests that inequality is strongly countercyclical (Psacharopoulos et al. 1997; Morley 1994). However, with economic reform being implemented in the 1990s, and with a declining per capita income level, Jamaica has been a paradox. Throughout the 1990s, the income distribution has narrowed. The explanation for the paradox is found in the incompleteness of economic reform along with the dominance of stabilisation policies. The fall in the value of physical capital and the rise in the cost of financial capital adversely affected the fortunes of the wealthiest quintile, which underlie the substantial distributional shift from that group to everyone else below. At the same time, the middle strata was somewhat protected by the inflexibility of the formal labour market, as they were able to pass on some of the cost of adjustment to the lowest quintile.


Reference Type

Journal Article

Year Published


Journal Title

Social and Economic Studies


King, Damien
Handa, Sudhanshu