This book is about how the distribution of income changes during the process of income development. Understanding development and the process of poverty reduction requires understanding not only how total income grows but also how its distribution behaves over time. The authors propose a decomposition of differences in entire distributions of household incomes, shedding new light on the powerful, and often conflicting, forces that underpin the changes in poverty and inequality that accompany the process of economic development. This approach is applied to three East Asian countries -- Indonesia, Malaysia, and China -- and to four in Latin America -- Argentina, Brazil, Colombia, and Mexico.

In this study of how income distributions in developing countries evolve, the authors propose a generalization of the Oaxaca-Blinder decomposition of differences in mean earnings, extending it to entire distributions of household incomes. The method uses a model of household income determination to simulate counterfactual distributions of income.