Higher Income Inequality Research Articles

Unveiling the Cosmic Race: Racial Inequalities in Latin America

This paper provides evidence of the welfare consequences of racial discrimination at the individual and racial inequality at the country levels in Latin America. Latin American countries built their national identities through a 'melting pot' ethnic figure: the 'Cosmic Race' or the mixed-race descendant from the European, Indigenous, and African populations. However, 'mestizaje' identity veiled income inequalities between racial groups. Using LAPOP AmericasBarometer data, I compile information on skin tone and proxies for income for nearly 100 thousand individuals across Latin American countries during the last decade. The purpose of the paper is twofold. In the first part, I use Spatial First Differences to provide causal estimates of the racial income gap: out of an eleven-color palette, every darker skin tone has at least 8 percent less monthly income per capita. I also use Oaxaca-Blinder decompositions to provide causal evidence that racial discrimination is the main mechanism driving the racial gap: two-thirds of the latter is due to racial discrimination, with substantial heterogeneity between countries. In the second part of the paper, I estimate newly racial inequality measures at the country level. Countries with higher income inequality between racial groups have worse economic development: a one percent increase in the ratio of racial over total income inequality correlates with a decrease of nearly 4 percent in GDP per capita. The results suggest that, besides justice or reparations, progressive policies on income or wealth can diminish racial inequalities and improve aggregate welfare.

Socioeconomic Determinants of Income Inequality Among Smallholder Arable Crop Farmers in Nigeria

Income is one of the yardsticks for measuring standard of living, and the inequality in its distribution makes smallholder crop farmers more trapped in abject poverty. In this paper, we examined the influence of household income sources on the overall income inequality and the contributions of households' socioeconomic characteristics to income inequality. We sourced our data from the 2nd wave of LSMS-Integrated Surveys on Agriculture General Household Survey Panel 2012/2013 conducted by the Nigerian Bureau of Statistics (NBS) and the World Bank (WB). The survey used a two-stage sampling technique; the first stage involves the selection of Enumeration Areas (EAs), which represent the primary sampling unit, using probability proportional to size (PPS) of the EAs in each state and the FCT. A total number of 1888 smallholder crop farmers with complete information were considered for this study. The methods adopted in analyzing the data were: Gini-coefficient decomposition by income sources and regression-based factor decomposition of inequality. To better reflect households' welfare, we used per adult equivalent household income as an alternative to total income. The result showed that the total income was ₦249,874,122.90 ($1,588,418.6) with an average income per adult equivalent of ₦132,348.60 ($841.30). The Gini decomposition revealed that the overall Gini index is 0.713, which indicates high-income inequality among farming households. Among all the income sources considered, crop income, non-farm income, and transfer income decreased income inequality while livestock income increased income inequality. The regression-based decomposition shows that majority of the variables selected to represent the socioeconomic factors have an increasing effect on income inequality. In contrast, variables such as age, gender, marital status, farm size, education, and dependency ratio have a significant impact on the adult equivalent household income. This study recommends that a land redistribution policy that will increase the farm size of farmers to boost small-scale crop production is necessary to bridge the gap of income inequality, promotion of improved technologies that will enhance farm household productivity. Lastly, policymakers should lay more emphasis on the mobility of transfer income from within and outside the country to fight inequality, given its decreasing effects on the overall inequality.

Perceived and Tolerated Inequality in South Africa

Twenty-five years after the apartheid regime, South Africa still battles with very high inequality. The country is regarded as one of the most unequal country in the world. The persistent high-income inequality triggers a huge concern about growth inclusivity as well as sustainability. Thus, as the persistent rise in inequality became the centre of recent economic and social research so did the tolerance of inequality. That is, over the years there have been lingering questions about inequality which remain unanswered. One of such questions is the exact relationship between perceived inequality and tolerance of inequality. This paper investigates the effect of perceived inequality on tolerance for inequality in South Africa. While a growing number of studies on actual-tolerated inequality nexus point to a positive relationship, others have observed neutral impacts of inequality on tolerated inequality. Further studies have revealed that, although people tend to reject inequality, the tolerance rate tends to be more in countries with a higher rate of inequality. However, other studies point to a feedback relationship between tolerated inequality and actual inequality. Thus, the relationship between perceived and tolerance of inequality has remained inconclusive. Using the International Social Survey Programme (ISSP) 2009, we investigate the relationship between perceived (measured by actual individual earnings) and tolerated inequality in South Africa. The results provide evidence, which suggests that perceived inequality is positively associated with tolerated inequality in South Africa. This suggests that awareness of prevalence of inequality in society will cause individuals to be unresponsive to more inequality. Our findings hold across a robust battery of robustness checks, including alternative measures of inequality, different samples, and inclusion of appropriate covariates. The results further showed that income influences individual's disposition to inequality tolerance. On education, South Africans tolerate more inequality as they climb higher on the educational ladder. On the location, it emerged that the acceptance of inequality tolerance is not location specific as all locations in South Africa are having strong feeling of delight toward inequality tolerance. Therefore, to help reduce all forms of inequality, we recommend for changes in the distribution of power, assets, access to education and health, employment opportunities at all levels.

Motorcycle to car ownership: The role of road mobility, accessibility and income inequality

Recent empirical studies indicated that motorcycle ownership grows as a nation’s economy develops, but decreases once incomes have passed a threshold level. The aim of this study was to assess the impacts of relative improvements in road mobility over road accessibility (MPA) and income inequality on motorcycle to passenger car ownership ratio (MPC). Particularly, we investigated how the reverse U-shaped relationship between MPC and economic expansion varied in response to changes in the MPA and income inequality. A fixed-effects panel linear regression analysis was performed on a panel of 53 countries over the period of 1963–2013. This study highlights four key findings in relation to the impact of per capita Gross Domestic Product (GDP) on MPC. Firstly, the effect of MPA on MPC differs by per capita GDP levels. Results indicated that a rise in MPA is likely to lead to increases in MPC at lower per capita GDP, specifically increases in the number of small power motorcycles, but lead to decreases in MPC once per capita GDP levels have exceeded US$3,081. However, as per capita GDP rises beyond US$44,767, an increase in MPA would lead to increases in MPC and one would expect increases in the number of high-power motorcycles. Secondly, there is a reverse U-shaped relationship between MPC and income inequality. That is, a rise in income inequality is initially accompanied by increases in MPC, but MPC decreases once per capita GDP levels have passed a specific level. Thirdly, under lower income inequality, there is a U-shaped relationship between MPC and per capita GDP, and fourthly, under higher income inequality, this relationship becomes reverse U-shaped.

Greater Female Employment Participation as a Catalyst to Reducing Income Inequality in Developing Countries – The Case of Latin American and Sub-Saharan African Countries

This paper unravels the linkage between income inequality and women’s participation in the labor force within a group of developing countries drawn from Latin America and sub-Saharan Africa. It adds to the existing body of literature by providing additional empirical evidence and pertinent situations to a group of countries in which current empiricism on the subject is to a large extent scanty. The choice of these countries has been done basically on grounds that they are subjected to very high income inequality trends and relentless policies encompassing gender biases. The traits are common to both sets of countries. Our regression results, based on 45 countries, clearly unfold that greater female participation in these countries tend to reduce income inequality. The major policy implication that emanates from this research is that governments in these countries should emphasize on empowering women to achieve greater gender equity in employment, lower income inequality and higher welfare for all.

Brazil

The COVID-19 pandemic has worsened Brazil’s longstanding vulnerabilities of low potential growth, high income inequality, and weak fiscal position. While the authorities mounted a rapid and effective response to support the economy and protect the poor and vulnerable, the virus outbreak is yet to be brought under control. Outlook and Risks. Real GDP is projected to contract by 5.8 percent in 2020 followed by a partial recovery to 2.8 percent in 2021. With weak domestic demand, inflation is likely to end 2020 substantially below target. Debt is projected to jump to 100 percent of GDP, due to a 10.6 percentage point deterioration in the primary deficit in 2020, and continue to rise over the next five years. The high level of debt exposes Brazil to confidence shocks. Securing congressional passage of structural reforms to raise potential growth remains challenging.

Regional Income Inequality in Lithuania

The problem of income inequality is globally relevant, receiving the attention of both scientists and pol- iticians. Lithuania as a small country has made significant progress in approaching the standard of liv- ing in Western Europe. However, there are still differences in economic growth between separate popula- tion groups. Thus, the problem of income inequality remains very acute. Currently, researchers are widely discussing the risk of income inequality to the country’s society by analysing its causes and proposing var- ious solutions. Although scientific debates address income inequality across regions, such studies are often limited to examples of large countries. Meanwhile, there is a lack of studies on regional income inequality in small countries, so the question of whether a small country is characterised by regional income inequal- ity remains open. This research aims to examine the level of regional income inequality in Lithuania. We hy- pothesised that Lithuania has a high level of regional income inequality and this is one of the causes of the high income inequality in the whole country. To estimate regional income inequality, we used the most com- mon measures: Gini coefficient, decile ratio, and the coefficient of variation. The analysis was performed at level 3 of the Nomenclature of Territorial Units for Statistics (NUTS), according to which Lithuania is divided into 10 administrative counties. For this research, we chose the indicators illustrating income per capita on various levels, i.e., gross domestic product (GDP) per capita, average disposable household income per cap- ita, and gross hourly wages, as the various types of income can be used. For the estimation of GDP per cap- ita and average disposable household income, we analysed the data provided by the Lithuanian Department of Statistics (Statistics Lithuania) for 2014–2017. Due to a lack of data to estimate gross hourly wages, we examined the statistical data from the Lithuanian Department of Statistics for 2014. The results show that the hypothesis has not been confirmed. According to the research results, there is a small distribution of in- come between different regions of a small economy, although the level of economic development of different regions differs. The study findings are important not only from an academic perspective for identifying the causes of income inequality and raising questions for further research, but also for regional economic policy makers. The obtained results show that decisions related to a more equal distribution of income in Lithuania as a small country are determined not only by the specificity of its regions but also by the general trends of the country.

ANALISIS KETIMPANGAN PENDAPATAN DI PROVINSI ACEH

Thisstudyaimsto analyze the factorsthatinfluence income inequality in Aceh Province. This study uses secondary data obtained from the Central Bureau of Statistics of Aceh Province in 2010-2017. Data analysis techniques used are the williamsonindex, entropytheil index, and multiplelinear regression analysis. Thetestresults using the Williamson index show that income inequality in Aceh Province is still quite high at 0.41%, and from the entropy theil index testing shows very high-income inequality at 1.47%, Economic growth (Growth) does not affect income inequality (INEQ) The unemployment rate (Unemp) does not affect income inequality (INEQ), the Gross enrollment rate (GER) affects income inequality (INEQ), and Agglomeration (Aglo) does not affect income inequality (INEQ).Keywords: income inequality.

Inequality in physical activity, global trends by income inequality and gender in adults

BackgroundPhysical inactivity is a global pandemic associated with a high burden of disease and premature mortality. There is also a trend in growing economic inequalities which impacts population health. There is no global analysis of the relationship between income inequality and population levels of physical inactivity.MethodsTwo thousand sixteen World Health Organisation’s country level data about compliance with the 2010 global physical activity guidelines were analysed against country level income interquantile ratio data obtained from the World Bank, OECD and World Income Inequality Database. The analysis was stratified by country income (Low, Middle and High) according to the World Bank classification and gender. Multiple regression was used to quantify the association between physical activity and income inequality. Models were adjusted for GDP and percentage of GDP spent on health care for each country and out of pocket health care spent.ResultsSignificantly higher levels of inactivity and a wider gap between the percentage of women and men meeting global physical activity guidelines were found in countries with higher income inequality in high and middle income countries irrespective of a country wealth and spend on health care. For example, in higher income countries, for each point increase in the interquantile ratio data, levels of inactivity in women were 3.73% (CI 0.89 6.57) higher, levels of inactivity in men were 2.04% (CI 0.08 4.15) higher and the gap in inactivity levels between women and men was 1.50% larger (CI 0.16 2.83). Similar relationships were found in middle income countries with lower effect sizes. These relationships were, however, not demonstrated in the low-income countries.ConclusionsEconomic inequalities, particularly in high- and middle- income countries might contribute to physical inactivity and might be an important factor to consider and address in order to combat the global inactivity pandemic and to achieve the World Health Organisation target for inactivity reduction.

Economic Inequality and Competition Law: ‎ A Comparative Analysis of the USA Antitrust Model

To what extent does the choice of competition law text associate with economic ‎inequality? While competition laws have been suggested as a possible factor ‎contributing to current inequality trends in developed countries and as a viable ‎instrument to address them, little empirical evidence exists on their distributional ‎effects. The article utilises a unique estimation strategy based on the textual similarity ‎between competition laws and the General Synthetic Control method. We test the link ‎between the similarity to USA antitrust text and income inequality across developed ‎countries. We show evidence that countries that adopt a USA antitrust text are more ‎likely to exhibit higher income inequality levels. The paper suggests that our findings ‎are related to the institutional structure of antitrust.

ECONOMIC GROWTH AND INCOME INEQUALITY IN SUB-SAHARAN AFRICA

Economies of Sub-Saharan African (SSA) countries have been growing slowly in recent time. Economic growth is thought to affect inequality but not much is known about the nature of such relationship in SSA and there is no concordance among the few available. This paper examined the relationship between economic growth and inequality in the region using data from 1990 to 2017estimated with the Panel Autoregressive Distributed Lag (ARDL) Model and Granger Causality. Hausman’s test suggested the superiority of the Pooled Mean Group (PMG) over the Mean Group (MG) Model. The PMG results showed that economic growth had significant and negative effect on income inequality (proxy by GINI-coefficient) in the long run suggesting a state of the later part of the Kuznet curve. This is in addition to the negative effect in the short run which is contrary to the theory. Furthermore, the result of the Granger Causality test revealed evidence of unidirectional relationship running from economic growth to income inequality in the region. Therefore, the study recommended that governments of Sub-Saharan African countries should implement policies and programmes capable of sustaining and improving inclusive growth in order to avoid high income inequality in the region.
 
 

Response to Lindström (2020) on "The trouble with trust: Time-series analysis of social capital, income inequality, and COVID-19 deaths in 84 countries".

There is substantial cross-national variation in the damage caused by COVID-19 and scant evidence on social and cultural factors that contribute to this variation. Our ecologic study of country differences in COVID-19 mortality found that deaths have increased faster in societies that had less confidence in state institutions and less civic engagement, more social trust and group affiliations, and higher income inequality (Elgar et al., 2020). Here, we respond to three criticisms of the study raised by Lindström (2020) regarding (1) socioeconomic patterns in influenza pandemics and the current COVID-19 pandemic, (2) data gaps in cross-national studies of wealth inequality and (3) the robustness of our findings across previous survey cycles of the World Values Survey. We stand by our results and encourage further investigation using larger samples, longer time periods and different approaches and measures. It is vital for social science to contribute to policy decisions that can mitigate the enormous human toll of the pandemic.

Analyzing the Gender Gap in Poland and Italy, and by Regions

High-income inequality, accompanied by substantial regional differentiation, is still a great challenge for social policymakers in many European countries. One of the important elements of this phenomenon is the inequality between income distributions of men and women. Using data from the European Union Statistics on Income and Living Conditions, the distributions of income for Italy and Poland were compared, and the gender gap in these countries was assessed. No single metric can capture the full range of experiences, so a set of selected tools were adopted. The Dagum model was fitted to each distribution, summary measures, like the Gini and Zenga inequality indices, were evaluated, and the Zenga curve was employed to detect changes at each income quantile. Afterward, empirical distributions were compared through a relative approach, providing an analytic picture of the gender gap for both countries. The analysis moved beyond the typical focus on average or median earnings differences, towards a focus on how the full distribution of women’s earnings relative to men’s compares. The analysis was performed in the different macroregions of the two countries, with a discussion of the results. The study revealed that income inequality in Poland and Italy varies across gender and regions. In Italy, the highest inequality was observed in the poorest region, i.e. the islands. On the contrary, in Poland, the highest inequality occurred in the richest region, the central one. The relative distribution method was a powerful tool for studying the gender gap.

Income inequality and income bias in voter turnout

In the era of growing income inequality around the world, it remains inconclusive how higher income inequality affects income bias in turnout (i.e., high-income citizens vote more likely than low-income citizens). Using large-scale cross-national survey data, we show that (1) strong income bias in turnout exists in many parts of the world, (2) higher income inequality is related to lower income bias in turnout by demobilizing high-income citizens and mobilizing low-income citizens, and (3) this relationship is partly explained by the pattern that vote buying is more common in societies with higher income inequality and thus mobilizes low-income citizens but decreases political efficacy among high-income citizens. Ultimately, this study suggests that growing income inequality may not exaggerate political inequality, but may challenge the legitimacy of democratic elections.

Addiction to inflation or to fiscal deficits? The Chilean experience of 1970s

AbstractLatin America is a region with very high income inequality and low social mobility. It has experienced several stagnation episodes and was plagued, from the mid‐1970s to the early 2000s, by hyperinflation. This phenomenon took place at different moments in time and with varying intensity. Using a novel data set for Chile, we identify the main drivers of fiscal reforms and seigniorage shocks that were crucial for inflation dynamics. We conclude that inflation, after the military coup that deposed Allende's socialist government, was used to finance defence spending non‐explicitly considered in the official figures. We interpret these fiscal expenditures as seigniorage shocks. Hence, the Chilean economy was addicted to fiscal deficits for most of the 1970s. Addiction to inflation, in the form of destabilizing inflation expectations that evolved independently of the level of seignorage, was not relevant.

Modeling maladaptation in the inequality\u2013environment nexus

Adaptation against environmental degradation has the potential to generate further environmental pressures. Does this aspect of adaptation affect the inequality–environment link? To answer this question, we develop a one-sector and one-input model which integrates threats to social and environmental sustainability posed by feedback effects of agents’ adaptation strategies. We distinguish between income inequality and welfare inequality with the latter depending on environmental quality, leisure time, income level and allocation of income to consumption or adaptation. Despite its parsimony, the model describes the conditions for the existence of different inequality–environment dynamic regimes. The model confirms the standard view that environmental degradation exacerbates welfare inequality, but it also produces non-trivial and surprising insights. It illustrates that income inequality affects the type of dynamic regime followed by the economy. High-income economies and economies with high-income inequality are most at risk of following a pattern of maladaptive growth with increasing welfare inequality and environmental pressure.

Examining the determinants of electricity demand by South African households per income level

For the period 1975–2016, this paper examines the determinants of the residential demand for electricity in South Africa including disposable income, electricity prices, food prices as well as the impact of the 2007/08 load-shedding wave and the 2008 electricity price restructuring. Given the high income inequality levels in South Africa, this relationship was investigated at aggregated and disaggregated income levels. Based on an Autoregressive Distributed Lag (ARDL) model, the empirical results indicate long-run cointegration between residential electricity consumption, gross national disposable income, electricity prices and food prices. Disposable income elasticities have a positive sign for the aggregate and all income groups, indicating that as income increases, South African households consume more electricity (normal good). As expected, price elasticities are negative and significant – for both the aggregated and disaggregated models – indicating that electricity prices do influence electricity demand for all South African households. The paper also examines the complementarity or substitutability of food and electricity. At both the aggregated and disaggregated income levels, the results showed that food and electricity are substitute goods for all South African households. However, as expected, the magnitude of this relationship is marginally different for each income group.

Regional Disparities in Turkey: A Socio-Economic Perspective

Economic development, for any country, is one of the most important objectives to be achieved. However, development cannot be realized in all regions and provinces of a county at the same time and speed. Turkey also struggles against a persistent economic development problem among regions in east-west and coast-inland for many years. This study aims to analyze the regional inequalities in Turkey under the scope of economic, demographic and social indicators from 2007 to the latest data. The results indicate that TR-10 Istanbul is the engine region of Turkey in terms of industrialization and development with the highest contribution (31%) based on service and industry sectors, to the gross value added. Other industrialized regions are the Aegean region where localization economies mainly dominated and the East Marmara and TR51-Ankara regions where urbanization economies operated in. Agricultural activities heavily concentrated in Aegean, Antalya, Konya and Şanlıurfa regions. In these regions, participation in the labour market is also very high. However, the highest income inequality and poverty is also found in TR10, TR62 and TR21 regions. The less developed region is the Southeast Anatolian region in terms of low income, education, health and high unemployment, young population and immigration rates. Keywords: Regional disparities, regional development, socio-economic indicators, Turkey

Personal income distribution in Turkey: A generalized ordered logit analysis

Income distribution decomposition may be affected by a variety of different factors. The main objective of this study is to examine potential factors of personal income distribution in TRA1 sub-region, the three highest income inequality in Turkey. The dataset was drawn from the Turkish Household Income and Life Conditions Survey. Due to the natural ordering of the dependent variable, a generalized ordered logit model was performed to analyze the data. Findings/Originality: The estimation results reveal that gender, age, marital status, educational level, occupational group, and general health status were found to be statistically significant determinants of personal income distribution in TRA1 sub-region of Turkey. The empirical evidence gathered from this study may add an explanation for personal income distribution decomposition in sub-regions of Turkey. In addition, the finding contributes to the human capital theory development that implies the importance of educational policy as one of the effective tools in reducing inequality.

The Relationship Between Transfer Expenditures and Income Inequality: A Comparative Evaluation via Panel Causality Analysis

Bu çalışmada farklı gelişmişlik düzeyine sahip olan 39 ülkede transfer harcamaları ile gelir eşitsizliği arasındaki ilişkinin tespit edilmesi ve bu ilişkinin ülkelerin gelir eşitsizliği seviyesine göre farklılık gösterip göstermediğinin ortaya koyulması amaçlanmaktadır. Bu amaç doğrultusunda analizde kullanılan ülkeler gelir eşitsizlik seviyeleri göz önüne alınarak iki gruba ayrılmaktadır. İlgili değişkenler arasındaki ilişki Toda–Yamamoto (1995) testine dayanan Emirmahmutoğlu-Köse (2011) panel nedensellik testi ile araştırılmaktadır. Analiz sonuçlarına göre gelir eşitsizliği yüksek olan ülkelerde transfer harcamalarından gelir eşitsizliğine doğru tek yönlü bir nedensellik ilişkisi bulunurken; gelir eşitsizliği düşük olan ülkelerde çift yönlü nedensellik olduğuna dair kanıtlar elde edilmektedir. Ayrıca ülkelere özgü sonuçların da elde edilmesini mümkün kılan bu yöntem ile transfer politikalarına ilişkin önerilerin genel nitelikte değil ülke bazında yapılması gerektiği söylenebilir.