Measuring the trickle-down effect: a case study on Singapore

Abstract

The present paper examines the ‘trickle-down’ effect, which is the diffusion of economic gains from the rich to the poor when the economy expands. While many studies in the literature attempt to measure the extent of trickling-down in different countries, the speed of this trickle-down effect has largely been ignored. This paper proposes a method to measure both the extent and the speed of the trickle-down process in a dynamic framework. This methodology is then applied to data on Singapore, which serves as a good candidate to examine trickle-down effects because it has experienced steady economic growth during the last three decades.