This paper evaluates the factors underlying the change in Tunisia”s income distribution between 1961 and 1971. It concludes that the number of households below the real poverty line has decreased significantly. There has not been any transfer of income from the poorest to the less poor and there does not appear to be an increasing gap between the two groups. It also examines the structure of increases in income among those groups above the poverty lines and notes that improvements in income of wage earners have occurred concurrently with low profits and depreciation. The low profitability of enterprises reflects their inadequate productivity and contribution to the country”s rate of economic growth. In fact, Tunisia”s substantial growth and the improvement in the standard of living of the less poor was made possible only by capital inflows.
