Income Concentration Research Articles

The role of Airbnb creating a “new”-old city centre: facts, problems and controversies in Porto

Urban tourism growth, favoured by short term rental platforms like Airbnb, is changing the cities dramatically. All over Europe local governments have been facing unbridled growth of the so-called sharing economy and developed different regulatory approaches: full prohibition; laissez-faire; and different sorts of limitations. We take Porto as a case-study, considering the exponential growth of tourism, Airbnb and floating city users over the past decade. We make use of qualitative and quantitative methods and draw on the official AirDNA database to analyse the relation between Airbnb and urban transformation, and the governance context. We conclude that the growth of floating city-users –stimulated by Airbnb– has been the main driver of urban change. The case of Porto –which in many ways illustrates the fast growth of short-term, rental-driven urban tourism in southern Europe– demonstrates that Airbnb’s global corporate narrative around property sharing, micro-entrepreneurship and tourism democratization hardly fits the urban reality of host professionalization, income concentration and growing massification. In this context, besides laissez-faire, urban sustainability concerns call for smarter regulatory approaches associated with more widely shared visions, and clear short, medium and long-term objectives.

Modified likelihood ratio tests for unit gamma regressions

Regression analyses are commonly performed with doubly limited continuous dependent variables; for instance, when modeling the behavior of rates, proportions and income concentration indices. Several models are available in the literature for use with such variables, one of them being the unit gamma regression model. In all such models, parameter estimation is typically performed using the maximum likelihood method and testing inferences on the model's parameters are usually based on the likelihood ratio test. Such a test can, however, deliver quite imprecise inferences when the sample size is small. In this paper, we propose two modified likelihood ratio test statistics for use with the unit gamma regressions that deliver much more accurate inferences when the number of data points in small. Numerical (i.e. simulation) evidence is presented for both fixed dispersion and varying dispersion models, and also for tests that involve nonnested models. We also present and discuss two empirical applications.

Clustering and regime dynamics for economic growth and income inequality

This study explores the dynamic relationship between income inequality and economic growth by using a non-parametric approach and numerical taxonomy as a research method based on data symbolization and clustering methods. The study uses annual data of the GINI index (considering two databases, i.e. the Standardized World Income Inequality Database (SWIID) and the Estimated Household Income Inequality Data Set (EHII)) and the Per Capita GDP Growth Rates (economic growth variable) for two samples, i.e. 38 countries between 1980 and 2015, and 23 countries during the period 1980–2010. This novel methodology is used to detect the existence of clusters of countries sharing similar economic performance that are characterized by the income inequality variable. Once the homogeneous clusters are fixed, using a dynamic econometric approach, we study the Granger causal relationship between economic growth and income inequality, and the positive or negative long-run effects. Our results show that in advanced economies there is an economic growth policy supporting income distribution, while in poor or developing economies economic growth is enhanced by income concentration.

Inovação social e processo empreendedor: aplicação de tipologia em start-ups da Yunus Negócios Sociais Brasil

Resumo O presente estudo aplica a tipologia bricolagem social, construtor social e engenheiro social, sugerida por Zahra, Gedajlovic, Neubaum et al. (2009), às entrevistas realizadas com avaliadores e empresários de start-ups apoiadas pela Yunus Negócios Sociais Brasil. Por meio de um estudo de caso, buscou-se identificar semelhanças e divergências entre as características dessas tipologias e a realidade desses negócios sociais, assim como aprofundar a identificação do perfil e motivações nesse processo empreendedor. Cada um desses tipos concentra características de inovação e utilização de recursos aderentes às propostas por Hayek (1945), Kirzner (1973) e Schumpeter (1942). Os negócios sociais, segundo a concepção de Muhammad Yunus (Nobel da Paz em 2006 pela criação do Grameen Bank), unificam em somente um modelo de negócio objetivos de impactos socioambientais positivos e sustentabilidade econômico-financeira, sem a distribuição de dividendos. Estes são destinados à expansão dos próprios negócios ou novas iniciativas de mesma natureza. Assim, negócios sociais maximizam a riqueza social e restringem a concentração de renda individual. Os resultados evidenciaram maior aderência ao tipo construtor social, de acordo com o empreendedor descrito na obra de Kirzner (1973). Este estudo ajudará empreendedores e investidores a compreenderem melhor os negócios sociais, auxiliando tanto no alinhamento dos modelos de negócio daqueles que querem receber apoio, quanto na decisão dos avaliadores sobre em qual negócio investir, apoiando a construção de mais estudos empíricos acerca do empreendedorismo e de negócios sociais.

Inovação social e processo empreendedor: aplicação de tipologia em start-ups da Yunus Negócios Sociais Brasil

Resumo O presente estudo aplica a tipologia bricolagem social, construtor social e engenheiro social, sugerida por Zahra, Gedajlovic, Neubaum et al. (2009), às entrevistas realizadas com avaliadores e empresários de start-ups apoiadas pela Yunus Negócios Sociais Brasil. Por meio de um estudo de caso, buscou-se identificar semelhanças e divergências entre as características dessas tipologias e a realidade desses negócios sociais, assim como aprofundar a identificação do perfil e motivações nesse processo empreendedor. Cada um desses tipos concentra características de inovação e utilização de recursos aderentes às propostas por Hayek (1945), Kirzner (1973) e Schumpeter (1942). Os negócios sociais, segundo a concepção de Muhammad Yunus (Nobel da Paz em 2006 pela criação do Grameen Bank), unificam em somente um modelo de negócio objetivos de impactos socioambientais positivos e sustentabilidade econômico-financeira, sem a distribuição de dividendos. Estes são destinados à expansão dos próprios negócios ou novas iniciativas de mesma natureza. Assim, negócios sociais maximizam a riqueza social e restringem a concentração de renda individual. Os resultados evidenciaram maior aderência ao tipo construtor social, de acordo com o empreendedor descrito na obra de Kirzner (1973). Este estudo ajudará empreendedores e investidores a compreenderem melhor os negócios sociais, auxiliando tanto no alinhamento dos modelos de negócio daqueles que querem receber apoio, quanto na decisão dos avaliadores sobre em qual negócio investir, apoiando a construção de mais estudos empíricos acerca do empreendedorismo e de negócios sociais.

Income Inequality and Market Fragility: Some Empirics in the Political Economy of Finance, Part I

A line of thinking associated with 19th- and early 20th-century political economy suggests that income and wealth concentration are not only unjust in some circumstances but also can operate as significant sources of systemic fragility in market economies. The issue is that losses below the top of the distribution can impede the functioning of consumer goods markets. That in turn deprives the macroeconomy of the consumer demand needed to support employment and investment.

The (Internet) Information Inequality Machine?

Advances in information technology have fundamentally altered how we make decisions, as well as the range of alternative options we might consider when deciding. From fairly trivial decisions to important ones, our decisions are increasingly informed by online expert or “crowd-sourced” ratings. The use of this ratings information is no surprise as it helps reduce uncertainty. As the prevalence and usage of ratings information increase, so too does the concentration of income and wealth as “superstars” garner an increasing share of returns. There is reason to believe these trends are entwined as predicted by seminal theories in both sociology (Merton’s “Matthew Effect”) and economics (Rosen’s star markets). Both Merton’s and Rosen’s theories imply that increasing availability of ratings information should exacerbate inequality. Viewed from a different perspective, however, increasing availability of ratings information may help facilitate comparison of entities on some dimensions, thereby allowing for differentiation and consumer sorting on other dimensions. This, in turn, should reduce inequality. I test these propositions in the context of the NYC restaurant industry from 1994 – 2013 using restricted-access administrative data and matched time-varying restaurant ratings. This period purposefully envelopes Yelp’s market entry and expansion, and the greater accessibility of ratings information it afforded. Results are statistically large and economically meaningful, and show heterogeneous information effects across different markets. For those market segments with less local information (e.g., tourists) making larger cultural purchases, ratings exacerbate sales disparities between competitors. Theoretical implications for both the Matthew Effect and Star Markets theories are discussed throughout.

Top Incomes in Germany, 1871–2014

This study provides new evidence on top income shares in Germany from industrialization to the present. Income concentration was high in the nineteenth century, dropped sharply after WWI and during the hyperinflation years of the 1920s, then increased rapidly throughout the Nazi period beginning in the 1930s. Following the end of WWII, German top income shares returned to 1920s levels. The German pattern stands in contrast to developments in France, the United Kingdom, and the United States, where WWII brought a sizeable and lasting reduction in top income shares. Since the turn of the millennium, income concentration in Germany has been on the rise and is today among the highest in Europe. The capital share is consistently positively associated with income concentration, whereas growth, technological change, trade, unions, and top tax rates are positively associated in some periods and negative in others.

Inequality Overhang: A Heterogeneous Approach

The linearity of the relationship between income inequality and economic
 development has been long questioned. While theory provides arguments
 for which the shape of the relationship may be positive for low levels of
 inequality and negative for high ones, most of the empirical literature assumes
 a linear specification finding conflicting results. Employing an innovative
 empirical approach, robust to endogeneity, we find pervasive evidence of
 nonlinearities. In particular, similar to the debt-overhang literature, we
 identify an inequality-overhang level, in that the slope of the relationship
 between income inequality and economic development switches from positive
 to negative at a net Gini coefficient of about 27 per cent. We also find that
 in an environment characterized by widespread financial inclusion and high
 income concentration, rising income inequality has a larger negative impact
 on economic development because banks may curtail credit to customers at
 the lower end of the income distribution. On the positive side, a sufficiently
 high female labor participation can act as a shock absorber reducing such a
 negative impact, possibly through a more efficient allocation of resources.

Economic Debates under Authoritarian Regimes: The Case of the Income Distribution Controversy in Brazil in the 1970s

The paper investigates the political and economic contexts of the controversy about the causes of the significant increase of income concentration in Brazil during the 1960s. That was the most important economic debate that took place under the military dictatorship that ran the country from 1964 to 1985. The perceived sharp increase in income inequality posed a challenge to the economic legitimation of the military regime, which had by the early 1970s achieved high rates of economic growth accompanied by falling inflation. We discuss the reasons behind the relatively open economic debate during a period of political repression, as well as its international dimension as reflected in the role played by institutions such as the World Bank.

Clase media y movilidad social en Colombia

A partir del análisis de clases sociales como expresión de la desigualdad social, en este artículo repasamos los fundamentos teóricos y metodológicos utilizados para explicar la expansión de la clase media en Colombia. A través de la perspectiva de la movilidad social, consideramos la dinámica de las oportunidades de vida de una clase de origen a una clase de destino como producto de cambios intra o intergeneracionales. A pesar de la diversidad de métodos y de puntos de corte para definir y medir las clases sociales, resaltamos el crecimiento de la clase media en Colombia y en América Latina en el último decenio. En Colombia, sin embargo, este crecimiento se enmarca en una paradójica situación de persistente concentración del ingreso; los cambios al interior de la clase que ha experimentado dicha movilidad social ayudan a explicar dicha paradoja.Así mismo, identificamos las teorías y aproximaciones que se han empleado para el análisis de clase social y de movilidad social en la sociología y la economía, donde el cruce interdisciplinar parece particularmente propicio, al integrar el análisis de la estratificación social con los procesos de producción y distribución de la riqueza. Reseñamos los métodos empleados para realizar estudios de movilidad social y las fuentes de las que se derivan los datos. Señalamos, igualmente, cómo la movilidad social ha ingresado a la agenda de las políticas públicas económicas y sociales. Finalmente, presentamos los estudios sobre el componente valorativo del análisis de la clase media, en los que se indica que no es claro que esta posea un conjunto homogéneo de valores o que tenga una posición mayoritaria a favor de la democracia. Como parte de las conclusiones, indicamos que, así como el análisis de la movilidad social con base en clases sociales es bienvenido desde el punto de vista conceptual, en la práctica la expansión de la clase media en Colombia ha implicado mejores oportunidades de vida para este grupo de población. Sin embargo, permanece para ella una amenaza por su vulnerabilidad y se echan de menos mejoras sustanciales en políticas que alivien la concentración del ingreso.

Economic Inequality - Dimenson and Social Costs

he distribution of the benefits of economic production has attracted an increasing amount of attention in the political discussion. The are two main controversial phenomena that have been observed: The increasing disparity between labor and capital incomes and the extreme concentration of personal income in the hands of the few. The indicators applied in these studies, which are mainly synthetic indicators, reveal the tendency but not the dimension of this process. The article presented here aims to avoid this deficiency, by defining goals for the income that all individuals should have. Based on this definition indicators are proposed to measure, the characteristics of inequality in a more concrete way. These findings are related, in a second step, to macroeconomic variables. This knowledge is tested by studies of inequality in the United States and Brazil.

Assessing the Impact of Direct Payments Convergence on Farm Income Inequality: The Case of Italian Farms

This paper investigates the effects of the convergence process of direct payments (DPs) on farm income inequality. The analysis uses the Gini coefficient concept and its decomposition on the FADN Italian sample in 2014 and 2019 to assess the impact of the DPs reform in Italy. Results of the analysis show that a marginal increase in direct payments will reduce income concentration. However, a shift of resources toward mountain areas could occur. The results of the analysis have some policy implications regarding the application of the convergence mechanism of the CAP in Italy: in fact, the convergence process leads to a redistribution of resources in favour of mountain areas. These results could feed the debate on the future of CAP direct payments after 2020, when the cut or, at least, the reduction of DPs could increase income concentration.

Income Concentration Trends and Competition in the Charitable Sector: An Analysis of Jewish Charities in England and Wales

Jewish charities are a subgroup of about two thousand, five hundred organizations, accounting for 1.5% of the total number of main charities in England and Wales. The increasing total income of general charities has prompted considerable debate about the perceived concentration of income and the perceived dominance of bigger charities over smaller ones. Meanwhile, the implications of competition for charitable behavior have remained underappreciated. Building on these assumptions and aiming to test how far the results of research carried out in the charitable sector in general apply to the Jewish charitable sector in particular, the research investigates the trends in concentration of income of a sample of 1301 Jewish charities operating between 1995 and 2015, using common measures of concentration to describe the competitiveness of the Jewish charitable sector in England and Wales. The findings suggest that the sector, in line with the wider UK charitable sector, experienced high levels of growth in terms of both aggregate total income and the number of charities operating, along with decreasing levels of income concentration. These findings allow one to hypothesize that, other things being constant, the increasing numbers of entrant charities may well have increased the size distribution of charities providing the same products or services, therefore exacerbating the competition for charitable funding in the Jewish charitable sector. This, in turn, on the one hand is likely to have exacerbated the competition for donations especially among charities pursuing similar causes, reducing the total amount of charitable money devoted to particular causes. On the other hand, the increasing numbers of charities providing the same products or services and the resultant increasing competition for funding may have impacted on the costs and efforts Jewish charities were able to divert to fundraising at the expense of resources that could be devoted, instead, to service provision.

Do Extended Family Members Protect Children from Disadvantaged Neighborhoods? Focusing on Behavioral Problems of Children

The developmental–ecological model highlights the contextual environments that influence children’s emotional and behavioral adjustment. No previous research considers neighborhood characteristics when examining the influence of extended family members. This study investigates the characteristics of neighborhoods where extended family households reside, and the confounding and moderating effects of extended family household structure and the neighborhood influences of income and co-ethnic concentration levels. Data come from the Los Angeles Family and Neighborhood Study and the decennial census. The analytical sample includes 1553 children between the ages of 3 and 11 years, clustered in 1191 households in 65 census tracts. This study uses multilevel linear regression modeling. Extended family households are more likely than nuclear families to live in lower-income neighborhoods, but with similar proportions of co-ethnics. Children in extended family households show higher levels of both internalizing and externalizing behaviors compared to children in nuclear families, an effect not explained by their neighborhood environments. Extended family members moderate the neighborhood effects, boosting advantages within co-ethnic concentrated neighborhoods. With a higher proportion of co-ethnics in their neighborhoods, children in extended families show lower levels of externalizing behaviors compared to children in nuclear families. Co-resident extended family members not only predict child internalizing and externalizing behavioral problems but also moderate their neighborhood environments. This study provides policy implications, highlighting the potential of extended members to promote child development.

Entrepreneurs, managers and inequality

Income concentration in the U.S. rose sharply since the 1970s. But the share of wealth held by the top 1 percent increased less. This can be partially accounted for by a quantitative model of occupational choice, in which rich individuals choose to become entrepreneurs or managers. Collateral constraints induce entrepreneurs to hold more wealth, while managers earn higher wages as a result of competitive assignments to firms. Declining tax progressivity from 1970 to 2000 replaces top entrepreneurs with top managers, which can account for 65% and 30% of the increase in the share of wages and income earned by the top 1 percent, respectively. At the same time, the share of wealth held by the top 1 percent remains stable, as entrepreneurs decumulate but managers accumulate wealth.

Income Concentration, Market Size and Informal Sector in Africa

In this study, we analyze the link between income concentration and the size of the informal sector. We construct a simple model where income concentration determines demand and firms decide whether to operate in the formal or the informal economy is outlined. The government collects taxes and returns them to society either as a productive public good for its use by formal firms or as transfers to the poor. It is further postulated that income distribution affects the response of the informal sector to different fiscal policies, either demand or supply-orientated. In this case, redistribution towards the middle class decreases the size of the informal sector and increases the capacity of fiscal instruments to reduce informality. Data concerns 38 Africans’ countries in which the characteristic of income distribution is similar across countries. Using this comparable macro-level panel data between 1991 and 2013, we find strong evidence that high-income concentration leads to a large informal sector. Furthermore, an economic policy, including the effective application of the tax and regulatory procedures, should help to keep down the size of the informal economy.

Racial density and the socioeconomic, demographic and health context in Brazilian cities in 2000 and 2010.

Racial density has not yet been explored in studies of racial inequalities in Brazil. Thisstudy identified categories of racial density in Brazilian cities and described the living and health context in these categories in 2000 and 2010, when demographic censuses were conducted. Ecological study which used skin color or race information from the last two censuses to calculate racial density (the ratio of people aggregated to the same racial group) of the Brazilian cities each year. Four categories of racial density (Brown; Mixed-race, predominantly black; White/Caucasian; and Mixed-race, predominantly white). Socioeconomic, demographic and health indicators were described to each category. The categories of racial density captured important inequalities throughout the census and also indicated the continuance of worse living and health conditions in the cities composed by Browns and mixed-race people, predominantly Black; better conditions were indicated in cities where White/Caucasians are predominant. The cities, composed mainly of Browns and mixed-race people, predominantly Black, presented younger age structure, worse human development indexes, greater social vulnerability, income concentration, infant and premature mortality (<65 years) and lower life expectancy in both censuses, as compared to other cities. Similarly to other countries, the racial density reflected inequalities in the Brazilian living and health context as well as a time lag among the cities. The categories of racial density may contribute to social epidemiology and race relations studies in Brazil.

Desarrollo humano y desigualdad en México

The Mexican neoliberal model and its policy of sustaining competitiveness in the low cost of labor, has caused an excessive concentration of income in the highest spheres of the Mexican population, in addition to growing poverty in our country; However, the shortcomings are not distributed equally, since inequality is expressed at the moment in territorial and social inequalities that in turn are a brake on economic growth in the long term. These inequalities can be corroborated by observing the very different levels of development achieved by the entities of our country measured through the Human Development Index. Although Mexico has traditionally been a nation of inequalities, until the mid-eighties of the last century these inequalities had been decreasing; However, the change in the economic model has caused an increase in these inequities. In this sense, the objective of this paper is to know how the concentration of wealth has caused enormous levels of inequality in Mexico. The methodology used is the comparison between the level of Human Development among the federative entities of our country and the evolution of the Gini index to understand how inequality has evolved and in which regions poverty has been concentrated. This reinforces the argument that the neoliberal model is the cause of the growth of poverty and inequality in Mexico.

Tax Preference As White Privilege in the United States, 1921–1965

Tax Preference As White Privilege in the United States, 1921–1965 Julia Ott Whiteness is also a matter of what is behind, as a form of inheritance, which affects how bodies arrive in spaces and worlds. We accumulate behinds, just as what is behind is an effect of past accumulations.1 —Sara Ahmed Inequality—in income, wealth, opportunity, consumption, health, security, political voice, and environment—presents the most pressing social challenge of our day. And it counts among the hottest areas of research in the social sciences.2 Capitalism may tend towards inequality, [End Page 92] as economist Thomas Piketty's exhaustive account suggests.3 Even so, the historical record makes it plain that public and private policies shape distributions of income, wealth, and wellbeing. This article examines the history of one particular policy that has contributed substantially to the concentration of income and wealth among the richest households—almost entirely white—in the United States: the preferential tax rate for capital gains. Since 1922, the IRS has allowed taxpayers to keep a greater portion of the gains they make from investments (so-called capital gains) than they keep from their wages and salaries (so-called earned, or ordinary, income). This is because capital gains are taxed at lower tax rate than the same amount of money is taxed when it is earned as salary or wage income (figure 1).4 For nearly a century, the reduced rates levied on gains from investment have undercut the progressivity of the U.S. tax code.5 Because the [End Page 93] Click for larger view View full resolution Figure 1. Income tax rates in the United States, 1918–2018 Source: Tax Policy Center, "Historical Highest Marginal Income Tax Rates" (March 22, 2017), https://www.taxpolicycenter.org/statistics/historical-highest-marginal-income-tax-rates; Tax Policy Center, "Historical Capital Gains and Taxes (May 5, 2017), https://www.taxpolicycenter.org/statistics/historical-capital-gains-and-taxes; Citizens for Tax Justice, "Federal Top Income Tax Rates Since 1913" (November 2011), https://www.ctj.org/pdf/regcg.pdf. wealthiest households earn the bulk of capital gains every year, this tax break benefits the rich overwhelmingly.6 Between 1922 and 2017, the top 10 percent of the income distribution received, on average, 84.2 percent of all realized capital gains, while the top 1 percent took, on average, 61.1 percent of all realized capital gains in the same period (compared to 38.2 percent and 13.0 percent, respectively, of all other income, excluding capital [End Page 94] gains) (figure 2). In every year since 1922, the tax preference for capital gains added several percentage points to the share of after-tax income taken by the top 1 percent and the top 10 percent of the income distribution (figure 3). Since 1989, the capital gains preference has been the single largest contributor to the rise in after-tax income inequality in the United States.7 This feature of the tax code also swells the bank accounts of the wealthiest because of how it affects the compensation of the highest earners. In the United States, partners in private investment funds (like venture capital, hedge funds, and private equity) often receive compensation in the form of a share of their clients' capital gains (so-called "carried interest"), and therefore, they pay the lesser tax rate. The preference for capital gains also encourages corporate executives to take stock-based compensation, anticipating that future gains will be taxed preferentially. With so much of their income and wealth dependent upon the performance of their company's stock, corporate executives focus on that performance in the short term at the expense of the long-term success of the corporation.8 They funnel corporate resources into pay-outs to shareholders like themselves in the form of dividends and buybacks intended to buoy share prices. Today, "the stock market delivers money from corporations to investors, not the other way around," in the words of economist J. W. Mason.9 The financial sector wields outsized and adverse influence over U.S. corporations, thanks in part to the tax break for capital gains for individuals and households. Given the overrepresentation of white...