Income Concentration Research Articles

Selective insensitivity to income held by the richest.

The misperception of income inequality is often touted as a critical barrier to more widespread support of redistributive policies. Here, we examine to what extent and why (mis)perceptions vary systematically across the income distribution. Drawing on data from four studies (N = 2,744)-including a representative sample and preregistered incentive-compatible experiments-we offer converging evidence that people specifically underestimate the amount of income held by the top of the income distribution. While this selective underestimation is likely driven by multiple mechanisms, including systemic factors, we find that cognitive biases contribute to the observed pattern of results. The rise of inequality in many developed countries has been documented before, and the fact that this growing inequality is largely driven by the outsized gains of the richest individuals may pose new challenges previously underappreciated: our theory and findings highlight that cognitive biases pose a key obstacle to people's recognition of the concentration of income among the richest individuals, and may potentially distort their preferences for redistribution. We conclude by discussing future directions for research and the importance of incorporating behavioral and cognitive limitations into the design of redistributive public policy.

Income inequality, banking competition, and monetary policy

AbstractPrevious research has shown that inflation contributes to income inequality. However, in recent years, there have also been increasing concerns about the effects of concentration in the banking system on economic activity. Notably, we ask the fundamental questions: “How does the concentration of assets in the banking system contribute to the concentration of income in society? Do the effects of inflation on inequality depend on the degree of banking concentration?” We develop a general equilibrium model with heterogeneous agents and microeconomic foundations for financial intermediaries to study the effects of concentration and monetary policy. The model predicts that concentrated banks contribute to inequality by holding large amounts of liquid assets in order to raise private—but not social—returns from capital investment. As concentrated banks distort the level of investment in the economy, the adverse effects of inflation on inequality are magnified in concentrated banking systems.

Information on income concentration and redistribution preferences: The case of the top 1% in the United States

In recent decades, income inequality has soared in the United States, but few studies utilize experimental methodologies to assess whether having reliable information on income concentration affects the formation of redistribution attitudes. We advance this emerging literature through an analysis of information on the income owned by the top 1% of the income distribution – a group that is socio-politically meaningful and axial to the recent rise of inequality. The empirical evidence draws on a novel split-sample survey experiment ( N = 4,000). The results indicate that having the real value of income concentration does not have an average, significant effect on redistribution attitudes. Neither does it moderate the positive association between prior perceptions of concentration and these attitudes. However, the analysis suggests that intense cognitive effort is related to preference revision. This is because, information reduces pro-redistribution attitudes among extreme overestimators who process the information more intensely.

Einkommens- und Vermögensverteilung in Deutschland

Abstract This article outlines income and wealth distribution trends in Germany since the 19th century, compared to other Western industrialised countries. We first discuss the evolution of aggregate wealth-to-income ratios. We then explore how the concentration of income and wealth among the top percentile evolved since the 19th century. For the period after 1990, we analyse the entire distributions from top to bottom, exploring why Germany differs from France and the U.S. Among European countries, Germany exhibits one of the highest concentrations of income and wealth.

Ethnic minorities and income inequality: the Albanian community in Italy

PurposeThis study explores whether ethnic minorities exhibit varying levels of income inequality compared to the host population.Design/methodology/approachThe research leverages a unique immigration event in Italy, specifically the settlement of multiple Albanian groups in southern Italy during the 16th century. This historical occurrence enables an investigation into the role of cultural traits in income inequality, as these groups are situated in the same geographical region and often share borders.FindingsThe results, which remain consistent after undergoing various robustness checks, indicate that Albanian villages, while still preserving their identity and tradition, tend to experience an approximately 2% lower level of income concentration compared to similar Italian municipalities.Originality/valueOur findings aim to provide supporting evidence for future policy considerations regarding the long-term impact of immigration on income inequality.

Local platform as a means of socioeconomic development and generation of well-being

The Digital Age has been established in the 21st century, generating profound changes in society and has its multidisciplinarity especially perceived with Artificial Intelligence. The concentration of economic power and income are important concerns. Predictions about the future of work range from alarming scenarios to optimistic scenarios. A complex scenario like this requires sophisticated approaches and strong coordination between the parties involved. The true legacy depends on how society will face the challenges and seek opportunities in the new era. Collective action is essential to promote people's well-being. The objective of this article is to propose the adoption of an ecosystem supported by a digital platform to promote socioeconomic development, integrating the different local agents to strengthen the community and expand opportunities for representatives of different social strata. This requires cooperation between public authorities, companies, and the community to create strategy, structure, and actions that meet local needs. The research was based on a literature review and application of concepts found in the literature on well-being, economic development, organizational models, networks, digital platforms and smart cities.

Исследование социально-экономического положения населения на основе анализа циклической мобильности

Cyclic mobility was studied in the work of T. Shanin based on data on the socio-economic situation of the peasantry in Russia in 1910-1925. We have carried out a study of the socio-economic situation of the Russian population for the period 2013-2021 based on statistical data and analysis of cyclical mobility. The direction of the shift of the obtained curves downwards in terms of total and average per capita incomes of the population, the amount of social payments and compensations confirmed the improvement of the socio-economic situation of households by 2017 and deterioration by 2021.. The increase in the steepness of the obtained curves by 2021 is characterized by the polarization of the property status of the population, an increase in the concentration of monetary and total income in the middle range. The curve in terms of social benefits, compensations and other payments to the population is characterized by a type of cyclical mobility.

Spatial and economic dynamics of bean crops in an important production hub in Brazil

Beans are a traditional grain crop consumed by humans that is of great importance for food security and farmers in terms of income in Brazil. Paraná is one of the largest bean-producing states in the country, but the area needed for its production is being lost, changing the dynamics of bean cultivation, and generating social and economic impacts. The objective of this study was to verify the spatiotemporal and economic dynamics of bean production in Paraná. For this purpose, using mainly data from the 2006 and 2017 agricultural censuses, the location quotient, the Hirschman–Herfindahl Index (HHI), the Williamson coefficient ([Formula: see text]), exploratory spatial data analysis (ESDA), and principal component analysis (PCA) were applied. From the results, it was possible to verify that there was a 13.95% reduction in the number of municipalities that specialized in bean production, from 98 municipalities in 2006 to 86 in 2017. Most specialized municipalities produced black beans or a combination of other colored beans. The HHI revealed that the specialized municipalities accounted for the most income from bean production. The [Formula: see text] indicated that the economic development of the central-eastern and southeastern Paraná mesoregions was related to bean production. Based on the ESDA, it was found a statistically significant and positive presence of spatial concentration in 2006 (Moran’ I = 0.36) and 2017 (Moran’ I = 0.51). Based on the PCA, it was possible to identify two main components that together explained 71.52% of the data variability. The reduction in the planted area, the decrease in the number of specialized municipalities, and the concentration of income from bean production in some municipalities make it difficult to reduce regional disparities in Paraná, and in addition, these factors increase concern about food security; thus, public policies are needed to reduce such impacts.

Income shares south of the Rio Bravo, 1920-2011

This paper analyses, for the first time, comparable income shares of the top 10%, the middle 50% and the bottom 40% of the labour force in Argentina, Brazil, Chile, Colombia, Mexico and Venezuela (LA6) from 1920 to 2011 using a new dataset. The main findings are: i) over the whole period the LA6 exhibited a recurrent very high income concentration at the top 10% (an average share of 48.1%) and a relatively low share for those of the bottom 40% (13.9%), with a Palma ratio of 3.5; ii) although the three shares varied over time and showed important differences across countries and developmental epochs, the region did not show a lasting equalizing outcome resembling the Great Levelling experienced by developed economies during the middle decades of the last century; iii) there is no support over time for the “Palma proposition” stating a relative stability of the income share of the middle 50%. Despite policy efforts in the 2000s to raise the income of the bottom 40%, altogether, a more equitable income distribution is still a pending task in Latin America.

Income shares south of the Rio Bravo, 1920-2011

This paper analyses, for the first time, comparable income shares of the top 10%, the middle 50% and the bottom 40% of the labour force in Argentina, Brazil, Chile, Colombia, Mexico and Venezuela (LA6) from 1920 to 2011 using a new dataset. The main findings are: i) over the whole period the LA6 exhibited a recurrent very high income concentration at the top 10% (an average share of 48.1%) and a relatively low share for those of the bottom 40% (13.9%), with a Palma ratio of 3.5; ii) although the three shares varied over time and showed important differences across countries and developmental epochs, the region did not show a lasting equalizing outcome resembling the Great Levelling experienced by developed economies during the middle decades of the last century; iii) there is no support over time for the “Palma proposition” stating a relative stability of the income share of the middle 50%. Despite policy efforts in the 2000s to raise the income of the bottom 40%, altogether, a more equitable income distribution is still a pending task in Latin America.

Reconstructing Income Inequality in Italy: New Evidence and Tax System Implications from Distributional National Accounts

Abstract This work reconstructs novel series on income distribution in Italy combining survey data, tax data, and National Accounts both at the national and regional levels, and it analyzes the overall progressivity of the tax system. Our new Distributional National Accounts allow to correct for remarkable misreporting of capital income in surveys, to provide more accurate estimates of consumption, and to better account for the role of informal economy. Our fresh estimates show higher income concentration at the top 1% and 0.1% with respect to previous studies in order of 1.5 percentage points. Moreover, the share of national income of the richest top 10%, top 1%, and top 0.1% has been steadily increasing after the 2008 crisis. Our results shed further light on the multifaceted nature of inequality in Italy: youngest individuals, women, and inhabitants of Southern regions have been increasingly exposed to growing levels of inequality. Finally, the Italian tax system is only slightly progressive up to the 95th percentile of the income distribution, and regressive for the top 5%. Moreover, it is regressive throughout the whole distribution when individuals are ranked with respect to their net wealth.

THE PROBLEMS OF CENTRALIZATION OF POPULATION MONETARY INCOME AND POVERTY IN ARMENIA

The relations of distribution and redistribution of monetary income of the population have a direct impact on the socio-economic development rates. The coefficient of income concentration (Gini index) characterizes the proportions of income distribution between different groups of the population (decile, quintile and others). According to which there should be a certain principle of division between them, however, it should be at the basis of social justice, as shown by the sociological surveys conducted in Armenia and Artsakh, justice is mentioned in the first place among other value systems in the perceptions of the population, which is evidenced by the many values of the Armenian society and the place of that category in the strata and its importance in raising the standard of living of the population. In order to ensure high economic growth and to ensure social solidarity and cooperation within the society, it is especially important to reduce poverty and to identify the existing problems in this regard.

Long-run evolution of income inequality in the Nordic countries

ABSTRACT This paper surveys Nordic historic studies on the distribution of income to highlight similarities and differences between Denmark, Finland, Norway, and Sweden in the evolution of income concentration and income inequality over more than 140 years. Our descriptive analysis allows for a decomposition where we identify the contribution of the income share of the richest 1 per cent and the distribution of income among the other 99 per cent to overall inequality as measured by the Gini coefficient. The results show that the evolution of income concentration and inequality can be characterised by episodes rather than by secular cycles, which means that the evolution can neither be summarised by Kuznets’ inverse U nor by a U. The evidence on the role played by the share of the top 1 per cent for overall income inequality shows to be mixed and to vary across time and countries.

Inequality, Consumption Emulation, and Growth

We develop a short-run neo-Kaleckian model to investigate the interplay of the functional and personal distribution of income and their impact on growth. Personal distribution becomes relevant in light of the institutionalist hypothesis of consumption emulation, which makes aggregate saving dependent on the concentration of wages and profits. A more equal distribution of wages and/or profits increases aggregate demand and the rate of capacity utilization. But the wage- or profit-led demand regime crucially depends on the difference between the propensity to save out of profits and that out of wages, as well as on the impact of changes in the profit and wage shares on the concentration of personal incomes. Preliminary evidence on Italy over the period 1980s–2010s highlights that demand regimes might be a relatively short-term and cyclical characteristic of that economy, with changes in the demand regime partly explained by changes in personal income distribution. JEL Classification: E11, D31, B52

Work from Home and Urban Structure

The sustained increase in working from home in the wake of Covid has the potential to reshape the US urban landscape. This article describes the big picture of pre2020 remote work in the US and summarizes how that picture changed during the subsequent three years. It then introduces a mathematical model designed to calculate the possible long-run impacts of increased remote work on where and how Americans work and live. This model predicts that the increased prevalence of remote and hybrid work arrangements will induce workers with remote-capable jobs to find housing farther away from their job locations, increasing the length of the average commute while cutting the time actually spent commuting. Jobs that produce goods and services which must be consumed locally will follow the bulk of the population to suburbs and smaller cities, while jobs producing tradable output will increase both in low-cost and high-productivity locations, at the expense of the middle. In the long run, the reallocation of demand to lower density locations with fewer legal restrictions on housing development should reduce the real price of housing by at least 1 per cent, but these changes depend on adjustments to the housing stock, both through new construction and through re-purposing commercial real estate in city centres. The model predicts a partial reversal of the decades-long concentration of talent and income in the centres of the biggest cities. Data on changes 2019–2022 suggest that some of this reversal is already happening.

Crecimiento económico inclusivo y comercio internacional en el Perú 2000-2021

Introduction/Purpose: Inclusive economic growth is a concept that has taken on importance in recent years globally; however, it has scarcely been studied in Peru. This research aims to know if there exists a positive relationship between inclusive economic growth and international trade in Peru in the period 2000-2021. Methodology: Inclusive economic growth was measured using the pillars of growth and development (per capita GDP, labour productivity, employment, and life expectancy) and inclusion (income concentration and poverty) of the Inclusive Development Index (IDI) proposed by the World Economic Forum. The Ordinary Least Squares (OLS) method was used to perform the regressions. Findings: The results show that the growth of International Trade in Peru has a positive relationship with two of the indicators of inclusive economic growth analysed: real GDP per capita and Vulnerable Employment. In contrast, it has a negative relationship with Labour Productivity. There is no statistical significance for the Poverty variable. Furthermore, there is no cointegration between Peruvian International Trade and Life Expectancy at Birth or Income Distribution. Conclusions: Therefore, it is concluded that inclusive economic growth has a positive relationship with Peruvian International Trade. The study focuses on four development pillars and two inclusion pillars, so the analysis will serve to propose policies that promote inclusive economic growth in Peru.

Incentives, globalization, and redistribution

We offer a new explanation for why taxes have become less redistributive in many countries while the concentration of incomes has increased. Our argument is based on the prevalence of incentive contracts in modern economies, in conjunction with increased product market integration. Globalization widens the spread of project returns and makes contract choices more responsive to tax changes. This can result in a lower optimal income tax rate while simultaneously increasing the income share of top earners. These results are confirmed in a calibrated version of our model based on U.S. income data.

Chilean Universities and Universal Gratuity: Suggestions for a Model to Evaluate the Effects on Financial Vulnerability

Financial vulnerability can be understood as the risk of an organisation being unable to carry out routine its normal operations due to financial restrictions. Models to estimate financial vulnerability have mainly been developed for profit-making organisations, while few exist for non-profit organisations (NPOs). One example is higher education institutions, which have experienced important changes in Latin America through gratuity policies for student tuition. This study proposes a model to estimate the effects of gratuity on financial vulnerability, as previous studies have focused on the effects of enrolment. A binary logistic regression model is proposed, considering the following variables: debt, income concentration, operating margin, administration costs, and square metres of rooms per student. We applied this model to 54 universities between 2013 and 2019. The results showed that the model is relevant for the debt, size, and operating margin variables. Additionally, we observed that on average, all universities were negatively affected. This result is particularly true for state-owned universities because of certain management restrictions. A limitation of this study is the unavailability of other sources of non-financial information, such as each university’s business model and stock of strategic resources, which could improve our model, as this information is more related to control than to management.

The income concentration among the rich in Brazil, 2012-2019

Resumo Este artigo tem como objetivo analisar a trajetória e o nível da desigualdade no Brasil entre 2012 e 2019 por meio do cálculo da concentração da renda brasileira no topo da pirâmide da distribuição, utilizando dados tributários da Receita Federal do Brasil. Além do 1% mais rico, o estudo também contou com a identificação de outros estratos ainda mais concentrados, o 0,1% e o 0,05%. A metodologia adotada foi a Interpolação de Pareto, que possibilitou a obtenção da proporção da renda nacional detida no topo da pirâmide. A hipótese é de que a desigualdade vista do topo é alta e não possui indicações de queda mesmo diante da crise econômica a partir do ano de 2014. Os resultados obtidos corroboram essa hipótese: os cálculos apontam que o percentual de renda detido pelo 1% mais rico oscilou pouco, em torno de 22%.

There is no capitalist conspiracy and the rich are not all‐powerful

There is no capitalist conspiracy and the rich are not all‐powerful