Decrease In Income Inequality Research Articles

Double Dualism, Economic Growth Slowdown, and Falling Income Inequality in Thailand

Thailand has experienced a decline in income inequality coupled with unimpressive economic growth since the end of the 1997/98 Asian financial crisis. This paper uses the structuralist approach to understand how these concurrent economic phenomena have become deeply intertwined. We argue that this intertwining results from Thailand’s economic structure, manifesting two types of dualism: (i) the dualism of the formal–informal sectors and (ii) the dualism of the dynamic–stagnant sectors. A decline in the informal sector in recent years coincides with a decrease in income inequality. Further, the second type of dualism between the dynamic and stagnant sectors has emerged since 2000. The stagnant sectors’ employment share has grown faster than that of the dynamic sectors, resulting in a slowdown in economic growth and less inequality. The decline of the informal sector and the rise of the stagnant sectors are the primary engines weighing down economic growth and reducing income inequality in Thailand.

Does Tourism Reduce Income Inequality Empirical Evidence for Turkiye

Income inequality poses a significant risk to societal harmony. While tourism presents numerous economic prospects, the ongoing discussion regarding its impact on income inequality persists. Assessing the potential of leveraging the growth in the tourism industry to address income disparities will have significant ramifications for Turkiye, a prominent player in the tourism sector. Hence, this study examines the influence of tourism on the disparity of wealth in Turkiye spanning the years 1995 to 2020. The RALS-EG method is used to examine this impact. According to the information obtained, while an increase in the GDP variable increases income inequality, an increase in the FDI variable leads to a decrease in income inequality. The tourism variable, which is the main subject of the study, has a negative sign and a 1 unit increase in tourism causes a 0.03% decrease in income inequality.

Impact of renewable energy expansion policies on the economy, income distribution, and air pollution reduction

This study employs a recursive dynamic computable general equilibrium model to evaluate the consequences of renewable energy (RE) expansion policies in South Korea, focusing on their impact on the economy, income distribution, and air pollution reduction. It assumes a scenario in which RE generation constitutes 20% of the total electricity generation by 2030. Various scenarios are explored, including those with and without emission regulations and those considering increased productivity of RE technology. Key findings suggest that expanding RE policies stimulates labor demand and revitalizes upstream industries. However, its effectiveness depends on increasing the efficiency of RE technologies. Carbon regulation, such as emissions trading schemes, reduces greenhouse gases and air pollutants, with environmental benefits outweighing GDP reductions. It decreases income inequality, whereas policies to promote RE exacerbate it, requiring corrective measures. Nevertheless, productivity improvements in the RE sector enhance income distribution.

Effects of digital innovation on income inequality among different workforces: evidence from Chinese industries

ABSTRACT To understand the impact of digital innovation on the workforce and its role in achieving common prosperity, this paper uses data from Chinese A-share listed companies during 2006–2021 to investigate the effects of digital innovation on income inequality among different industry-level groups. We find that digital innovation significantly reduces income inequality among employees across industries, but it does not significantly impact income inequality within management groups. Through mechanistic analysis, we find that digital innovation decreases income inequality among ordinary employees whose incomes are closely linked to company performance and thereby for the entire workforce by narrowing the income gap across industries. However, as digital innovation does not significantly influence evaluation systems (e.g. educational degrees) for management income, it does not contribute to reducing income inequality among managerial levels. These findings provide valuable insights to develop policies for common prosperity.

Trade openness and income inequality: The moderating role of institutional quality

This study examines the effects of trade openness on income inequality and the moderating role of institutional quality in this dynamic within the Association of Southeast Asian Nations. We find the inverted U-shaped relationship between trade openness and income inequality. At a low level of trade openness, an increase in trade openness leads to higher income inequality. Beyond a certain threshold, however, trade openness starts to decrease income inequality. Institutional quality plays a moderating role, proving essential in reducing inequality. As policies and regulations improve and mature, they support private sector growth, contributing to a decrease in inequality. We highlight the importance of institutional quality as a moderator, not only to promote economic growth but also to ensure an equitable distribution of its benefits, particularly those derived from trade openness, across society.

Do natural resources rents reduce income inequality? A finite mixture of regressions approach

The World Bank report (2023) highlights that almost all types of natural capital, the global stock of resources and services provided by nature, are in decline while inequalities persist. Based on this context, the objective of this article is to analyze the effect of natural resources on income inequality in 73 developing countries over the period 2005–2020. Unlike previous works, this article examines the possibility that countries follow different inequality regimes and test the hypothesis that whether natural resources, reduce or increase income inequality depending on the inequality regime to which countries belong. We used a finite mixture regression model, and we found that our sample is best described by a model with five regimes of countries. The results show that the effect of natural resource rents on income inequality varies across five distinct regimes of countries. In regimes 1 and 2, natural resources have a positive effect on inequality, while in regimes 3 and 4, they have a negative effect on inequality. In regime 5, the effect is not significant. Furthermore, our analysis shows that countries that have low levels of political risk are likely to be in the regime where the dependence of natural resources decreases income inequality. These results clearly emphasize that for countries with abundant natural resources to fully benefit from reduced inequality, they must undertake strong reforms to reduce political risk. These reforms include improving the quality of the judicial system, intensifying the fight against corruption, and reducing investment risks.

Towards Achieving the Sustainable Development Goals (SDGs): The Impact of Debts on Income Inequality in Africa

The Agenda for Sustainable Development provides a framework for the creation of a better and sustainable future for all. The Sustainable Development Goals (SDGs) focus on addressing global challenges, including income inequality. Among others, the SDGs also commit countries to work towards reducing income inequality and as such, lowering income inequality is one of the key issues in Africa. However, given the high levels of debt on the continent, reducing income inequality could be a challenge. Majority of the literature examines the link between debts and economic growth with little attention paid to the impact of debts on income inequality. Moreover, not much is known on whether the relationship between debt and income inequality is non–linear. This study therefore contributes to the existing research efforts by investigating the threshold effects of debts using data from 24 African countries by relying on the sample splitting and threshold estimation approach. The results reveal that, while debts generally dampen income inequality, unbridled debt accumulation above the estimated thresholds does not decrease income inequality, indicating that the income inequality–reducing impact holds at lower levels of debt–to–GDP ratio. This evidence is insensitive to different indicators of income inequality and debts. Findings from this study show how increasing indebtedness contributes to widening income inequality in Africa.

Income inequality effect of government investment behavior: Comparisons based on different investment areas, different regions and different groups in China

The research focuses on and analyses the effect of government investment on income distribution by evaluating the effects of public spending on income variation in various fields, in various regions, and at different income levels in the Chinese economy. The study found that government investment in different fields substantially decreases income inequality. Increasing housing security, medical, agriculture, forestry and other expenditures has a significant impact on improving the income inequality between rural and urban inhabitants; the impact of government investment in the western, central, and eastern regions on the reduction of income variation is decreasing successively, with emphasis on government investment in the western and central regions. The effects of government investment on the decline of the income distribution are twofold: first, it influences the amount of low- and middle-income groups; second, it has an impact on the reduction of high-income organizations; however, the impact on the income equality of high-income and low-income organizations is not considerable. In investment, the study demonstrates that income inequality can be reduced without negatively affecting the financial status of higher-income individuals. It is significant to value providing adequate housing security for low-income populations as a critical policy implication. This study, utilizing novel indicators, contributes to the current body of research on the impact of fiscal policy in addressing income inequality in China.

Trade Openness and Income Inequality – A Fresh Perspective

In the realm of economics, the relationship between trade openness and other indicators of economic growth, alongside their impact on income distribution, has been a subject of extensive examination by economists globally. Despite the considerable attention devoted to this topic, the findings remain inconclusive, particularly concerning developing countries. Some studies suggest that increased trade openness correlates with a decrease in income inequality, while others propose the opposite. This lack of consensus has led to ongoing debates among economists and policymakers in developing nations regarding the merits and drawbacks of trade liberalization. By examining a wide range of scholarly literature on the subject, this paper aims to shed light on the complex and multifaceted interactions between trade openness, various indicators of economic growth, and income distribution. Through meticulous analysis and synthesis of existing research findings, we endeavor to provide insights that contribute to a better understanding of how trade policies influence income inequality dynamics in both of developing as well as developed economies. In pursuit of these objectives, the paper will employ rigorous analytical methods and draw upon diverse datasets from different countries and time periods. By systematically exploring the relationships between trade openness, GDP growth, FDI inflows, employment trends, and income distribution, we aim to offer valuable insights that can inform evidence-based policymaking and contribute to the ongoing discourse surrounding the role of trade in shaping economic inequality. Ultimately, our endeavor seeks to advance knowledge in this field and provide guidance for policymakers grappling with the challenges of fostering inclusive economic growth amidst the complexities of global trade dynamics.

Growth, fiscal and welfare implications of trade liberalization in Africa: A macro‐micro modeling assessment of the Senegalese economy

AbstractThe African Continental Free Trade Area (AfCFTA) has been hailed as a key pillar and catalyst for economic growth, industrialization, and sustainable development in Africa. One of the anticipated benefits is the promise to increase intra‐African trade through the elimination of import duties and other tariffs among countries. However, due to the heterogeneity between the African countries, questions remain as to whether each country will benefit from tariff elimination. This paper aims to evaluate the macroeconomic, fiscal, and welfare consequences of import tax removal in Senegal with the rest of Africa. We link an extended version of the partnership for economic policy (PEP) static computable general equilibrium (CGE) model with a non‐parametric microsimulation approach. We calibrate the model with Senegal's most recent Social Accounting Matrix. The microeconomic model is calibrated using the latest Senegalese household consumption survey. The findings indicate that tariff removal from the rest of Africa has favorable economic, fiscal, and welfare impacts for Senegal. The paper suggests that it will lead to an increase in economic growth and investment. The removal of tariffs is expected to favor urban households over rural ones and leads to a modest decrease in income inequality, accompanied by a 3.36% reduction in the number of poor.

Women's engagement in agriculture and income inequality in sub-Saharan Africa

Women play a significant role in economic development in Africa, notably in agriculture, where their engagement is substantial. This study analyses the effect of women's engagement in agriculture (WEA) on income inequality in sub-Saharan Africa, using data sourced from the World Development Indicators and the Standard World Income Inequality Database for the period 1991–2018. Pooled ordinary least squares and instrumental variable two-stage least squares are employed to analyze the data. Results show that WEA effects are heterogeneous across African regions. Specifically, the study finds that WEA decreases income inequality in southern and western Africa but increases income inequality in central and eastern Africa. Policies aimed at reinforcing women's rights in agriculture by increasing their access to credit and to land, and by giving them a better education, will help to reduce the income gap that exists between women and men.

Does educational inequality lead to income inequality? Evidence from Pakistan

One of the main issues that developing nations like Pakistan are dealing with is income inequality. Education, inter Alia, plays a key role in reducing income inequality. Theoretically, in developing countries, it is anticipated that there exist two groups: the bourgeoisie (have) and the proletariat (have not), as suggested by Karl Marx, and there is an educational difference between these two groups, and Pakistan is no exception. This study aims to investigate the impact of educational inequality on income inequality at the provincial level of Pakistan with a rural-urban break up for the period from 1998-99 to 2018-19 (pooled data). Keeping in view the nature of the data, panel data techniques are applied. Appropriate tests (i.e., the F-test and the Hausman Specification test) suggest that Fixed Effect Model is the preferred model. The results show that there is a statistically significant positive link between educational inequality and income inequality. The results are robust to various proxies of educational inequality and income inequality (i.e., Gini coefficient, Generalized Entropy, and Atkinson Index) as well as to control variables (i.e., income and poverty). Further, the study found the negative relation between income and income inequality to be statistically significant, indicating that an increase in income leads to a decrease in income inequality. Moreover, the impact of poverty on income inequality is positive and statistically significant. The policy insinuation is that the government should focus on reducing educational inequality to reduce income inequality in Pakistan.

Impact of agricultural infrastructure development on inequality and optimization equality of farmers’ income in Indonesia-Timor Leste Border Area

This research aims to analyze income inequality and the factors determining inequality, as well as the allocation of land resources that optimize income distribution. The research is a continuation of previous research that found production and income growth as a result of the construction of the Roticlot Dam in the border area of Indonesia and TimorLeste. The research used survey methods in Fatuketi Village, the location of agricultural infrastructure (Rotiklot Dam) in the Indonesia and Timor Leste Border Area. Data analysis uses Gini, Tobit ratios, and linear programming. The results of the Gini ratio analysis show that there has been a decrease in income inequality from medium (Gini Ratio = 0.44) to low (Gini Ratio = 0.26); and the results of the Tobit analysis state that the factor that has a significant positive effect on income inequality is land area, while farmer independence, the number of family dependents, and business capital have a significant negative effect. Furthermore, land resource factors that have a positive influence on income distribution are allocated appropriately and fairly so that income equality is achieved, namely IDR 3,732,692.81 (Gini Ratio = 0.00, which is a very low level of income inequality). It is recommended that agrarian reform through the distribution of additional land be adjusted to the existing conditions of land area, income, availability of water resources, and socio-economic factors.

Digital financial inclusion and income inequality nexus: Can technology innovation and infrastructure development help in achieving sustainable development goals?

The United Nations (UN) 2030 agenda for sustainable development seeks to eliminate poverty in all its forms. An estimated 1.3 billion people in the BRICS countries are below the poverty line. This study examines the nexus between digital financial inclusions (DFI) and income inequality GINI) in the context of BRICS countries, with a focus on the moderate impacts of technological innovation (TI) and infrastructure development (ID). Applying the Driscoll-Kraay (DK) and fixed effects tests, the results show that DFI significantly negatively influences income inequality, with TI and ID contributing to strengthening this effect. The findings indicate that implementing TI and ID can potentially decrease income inequality in BRICS nations by facilitating faster, more secure, cost-effective transactions and offering greater access to markets and essential services. This study emphasises the need for policymakers to prioritise the implementation of TI and ID to accomplish sustainable development goals and encourage financial inclusion for all in the BRICS countries.

Online Social Network Effects in Labor Markets: Evidence from Facebook's Entry to College Campuses

Abstract Using quasi-random variation from Facebook's entry to college campuses, I exploit a natural experiment to estimate the effect of online social network access on future earnings. I estimate that access to Facebook for an additional year in college causes a .62 percentile increase in a cohort's average earnings, translating to an average wage increase of around $970 in 2014, and decreases income inequality within a cohort. I provide indirect evidence that wage increases come through the channel of increased social ties between college alumni, strengthened employment networks, and increased match value between students' majors and later occupations.

Education Expansion, Income Inequality and Structural Transformation: Evidence From OECD Countries

AbstractWe study the relationship between educational inequality, income inequality and economic transformation using data of 20 OECD countries from 1870 to 2016. Our results show that educational expansion policies increase income inequality in the long run, while having no significant effect on the short run. The structural transformation suggested by Kuznets (1955) explains this potentially counter intuitive result, where contemporary policy, given its focus on the importance of increasing participation and expanding education, must be predicated on the notion that education expansion should decrease income inequality. We quantify the impact of educational inequality on employment in different sectors and find that education expansion promotes the structural transformation towards a higher wage disparity sector. Particularly, expanding education increases the employment in the service sector and reduces the employment in the agriculture sector. Overall, our findings suggest that educational expansion policies play an important role in economic development via promoting the structural transformation, though this leads to higher income inequality. That education expansion is ineffective in reducing income inequality, and instead exacerbates it in the long run, requires significant policy revision despite the popularity of such policies.

Simultaneous Relationship between Financial Inclusion, Economic Growth, and Income Inequality in Sulawesi Island, 2011–2019

Sulawesi Island has fairly high economic growth but is not followed by a significant decrease in income inequality. Therefore, a new strategy is needed to overcome these problems, one of them by increasing the role of the financial sector through financial inclusion. This study aims to analyze the relationship between financial inclusion, economic growth, and income inequality, as well as the factors influencing them in Sulawesi Island from 2011 to 2019. The analytical method used is the simultaneous equation model with panel data using the EC2SLS model. The results show that there is a simultaneous relationship between financial inclusion and economic growth and also between economic growth and income inequality. Economic growth has a positive and significant effect on financial inclusion. Financial inclusion, foreign direct investment, and government spending have a positive and significant effect, while income inequality has a negative and significant effect on economic growth. Financial inclusion and inflation have a positive and significant effect, while economic growth has a negative and significant effect on income inequality. Thus, this study can show that financial inclusion can reduce income inequality by promoting economic growth.

Fiscal illusion and income inequality: an empirical investigation

PurposeThe present study investigates the role of fiscal illusion on income inequality in 46 selected countries in terms of income and development levels from 2002 to 2017.Design/methodology/approachThe effect of fiscal illusion on income inequality is tested using the two-step system generalized method of moment (SYS-GMM) estimator.FindingsThe findings reveal the negative effect of fiscal illusion on income inequality, which means increasing fiscal illusion decreases income inequality in 46 selected countries. As in other countries, income inequality declines when fiscal illusion increases in high-income and developed countries, although the redistributive effect of fiscal illusion is more in high-income and developed countries than in other countries. In addition, the results demonstrate the positive effect of unemployment, urbanization and inflation as well as the negative effect of trade openness on income inequality in all three models.Originality/valuePrevious studies have examined the role of government in controlling income inequality from different perspectives; however, no study has detected the role of government in income distribution regarding fiscal illusion.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-05-2022-0311.

The link between ACEs, income, and maternal depressive symptoms through a racial and ethnic lens: A moderated-mediation analysis

Maternal depression is a prevalent psychological concern that affects all racial and ethnic groups. Prior research suggests adverse childhood experiences (ACEs) are an important social determinant of depression; however, few studies have examined the roles that income and race/ethnicity play in this relationship. Using a life-course perspective, this article examined whether adult family income mediated the relationship between ACEs and adult depressive symptoms among 3,106 mothers from the prospective Geographic Research of Wellbeing survey. We also examined whether race/ethnicity/immigration status moderated the relationships between ACEs, income, and symptoms. We used both mediation and moderated mediation to conduct secondary data analysis. Income significantly mediated the relationship between ACEs and depressive symptoms (b = 0.012, p = .012). The relationship between ACES and depressive symptoms was stronger among immigrant Latina participants (b = 0.25, p< .001) compared to non-Latina White participants (b = 0.12, p< .001). Practitioners should consider the role of income as a social determinant of maternal depression, promote policies that decrease income inequality, and further examine how race/ethnicity impacts the relationship between childhood adversity and maternal mental health.

A multidimensional free market and income inequality in developing Asia: How does the quality of governance matter?

AbstractThis paper empirically examines how a free market, a governance quality (GQ) and their interaction simultaneously affect income inequality in 23 Asian developing countries over the period 2000–2019. Especially, different dimensions of a free market proxied by various components of economic freedom (EF) are analysed. Results show that the overall EF and three of its components, including labour freedom, trade freedom and investment freedom, reduce income inequality; but other components, including business freedom (BF), monetary freedom (MF) and financial freedom (FF), widen income inequality. Meanwhile, the GQ not only decreases income inequality but also intensifies the beneficial impacts of the overall EF and those respective components of EF on income equality. Notably, at certain thresholds of GQ, the detrimental impacts of BF, MF and FF on income equality turn into the advantageous ones. The findings consolidate the appropriate combination of free market with specific dimensions and the GQ in boosting the equality of income distribution in Asian developing countries.