Distribution and Mobility of Wealth of Nations

We estimate the empirical bimodal cross-sectional distribution of real Gross Domestic Product per capita of 120 countries over the period 1960–1989 by a mixture of a Weibull and a truncated normal density. The components of the mixture represent a group of poor and a group of rich countries, while the mixing proportion describes the distribution over poor and rich. This enables us to analyse the development of the mean and variance of both groups separately and the switches of countries between the two groups over time. Empirical evidence indicates that the means of the two groups are diverging in terms of levels, but that the growth rates of the means of the two groups over the period 1960–1989 are the same.

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