Income Heterogeneity Research Articles

Heterogeneity in disparities by income in cardiovascular risk factors across 209 US metropolitan areas

ObjectiveThe United States has a lower life expectancy and wider income inequality than its similarly developed counterparts, and disparities continue to widen. The objective of our study is to examine the heterogeneity of disparities by income in cardiovascular disease (CVD) risk factors among U.S. metropolitan areas. MethodsData was obtained from the Behavioral Risk Factor Surveillance System for 2012–2019. We used self-reported data for respondent characteristics and for CVD risk factors/prevalence, and on metropolitan-level demographic and socioeconomic characteristics. We computed the relative index of inequality (RII) for each outcome using a multilevel Poisson model, sequentially adjusted for age, sex, and race/ethnicity with a random slope for income. We also included interactions between income and the metropolitan-level variables. ResultsOur sample included 1.4 million participants from 209 metropolitan areas. All CVD risk factors and CVD demonstrated income-related disparities. There were no clear regional patterns for risk factors, though seven of the top 10 large metropolitan areas with the widest disparities in CVD prevalence were in the South. Improved socioeconomic conditions were associated with wider disparities in the five risk factors, and contextual variables explained almost half of the variability in income disparities in smoking, sedentarism, and obesity, even after adjusting for age, sex, and race/ethnicity. ConclusionsThis study found that CVD risk factors and prevalence in U.S. metropolitan areas have heterogeneous income disparities, especially in advantaged metropolitan areas. Further studies with improved data collection may shed more light into potential drivers of income-based disparities in cardiovascular risk.

Does Increasing Concentration Hit Poorer Areas More? A Study of Retail Petroleum Markets*

A central tenet in the field of industrial organisation is that increasing/decreasing market concentration is associated with increased/reduced markups. But does this variation affect every consumer to the same extent? Previous literature finds price dispersion exists even for homogeneous goods, at least partially as a result of heterogeneity in consumer engagement with the market. We study this question by linking demographic and income heterogeneity across local areas to the impact of changing market concentration on markups. With 15 years of station‐level motor fuel price data from Western Australia and information on instances of local market exit and entry, we apply a non‐parametric causal forest approach to explore the heterogeneity in the effect of exit/entry. The paper provides evidence of the distributional effect of changing market concentration. Areas with lower income experience a larger increase in petrol stations' price margin as a result of market exit. On the other hand, entry does not benefit the same low‐income areas with a larger reduction in the margin than in high‐income areas. Policy implications include a need to further focus on increasing engagement by low‐income consumers.

The Impact of Herders’ Risk Attitudes on Livestock Insurance: Evidence from the Pastoral Areas of Tibetan Plateau

In the context of advancing the transformation and upgrading of grassland animal husbandry, encouraging and guiding the widespread adoption of livestock insurance plays an important role in promoting the sustainable development of the livestock industry. This paper explores the impact of herders’ attitudes and perceptions towards climate change risks on their livestock insurance strategies. Firstly, experimental economics methods are employed to measure the risk preferences of herders on the Tibetan Plateau. Secondly, a theoretical model incorporating risk preferences and insurance adoption behavior is constructed. Finally, the effects of herders’ risk preferences on insurance adoption behavior are empirically examined through double-hurdle models, instrumental variable models, and moderating effect models. The results reveal that (1) most herders on the Tibetan Plateau exhibit risk-averse characteristics. (2) The degree of risk preference has a significant negative impact on herders’ insurance adoption behavior, while the risk perception significantly positively influences insurance adoption. The results remain valid even after addressing issues of endogeneity and conducting robustness checks. (3) Livestock income plays a crucial moderating role in the mechanism through which risk attitudes affect insurance adoption behavior. (4) The impact of risk preference on insurance adoption behavior shows regional and income heterogeneity.

Achieving zero emission targets: The influence of green bonds on clean energy investment and environmental quality

The effectiveness of green finance in driving clean energy and environmental sustainability in the current era is receiving attention. Therefore, this study proposes an empirical framework highlighting the effects of green bonds (GB) on clean energy investment (CEI), clean energy investment efficiency (CEE) and environmental sustainability of 29 green bond issuing countries between 2014 and 2022. Using system and difference GMM approaches, this study finds that (i) green bond issuance drives clean energy investment. (ii) Green bonds sufficiently enhance the selected countries' environmental quality. These results supplement the promotion of green bonds in increasing the transfer of funds towards renewable energy projects by reducing reliance on fossil fuels. (iii) Using Driscoll & Kraay, Fully Modified-OLS, and changing the dependent variable, this study further supported the idea that green bonds effectively promote the CEE and environmental sustainability of the chosen countries. (iv) Similarly, this study conducted income heterogeneity, showing that green bonds improve high- and middle-income countries' CEI and environmental quality. (v) Finally, the results indicate that resource consumption escalates CO2 emissions by declining the CEI. Technological innovations increase CEI, whereas they do not mitigate CO2 emissions directly, hinting at the requirement for a comprehensive approach. Therefore, inclusive policies on green bond frameworks, robust incentives, and rigorous environmental criteria should be implemented to attract investment in clean energy development and ensure the environmental sustainability of the selected countries.

Does Inequality Still Matter? Income Heterogeneity and Local Government Expenditure

Does Inequality Still Matter? Income Heterogeneity and Local Government Expenditure

On the provision of excludable public goods: General taxes or user prices?

AbstractThis paper compares some of the most common ways of financing the provision of publicly provided impure public goods/services in a unified dynamic general equilibrium framework with heterogeneous income groups. The focus is on the effects of user prices on individual incentives and how the latter shape aggregate outcomes and distribution. We show that a market‐like mechanism of user prices not only improves individual incentives and enhances aggregate efficiency, but it is also Pareto improving. However, such a mechanism is not beneficial or simply collapses when social externalities are strong, when the government adopts a mixed system that combines user prices with heavy subsidization of user costs, and when there is a minimum amount of the good that everybody needs.

Transmission mechanisms in HANK: An application to Chile

Households in emerging economies are subject to significant income risk and have low access to financial markets. Leveraging multiple administrative microdata sources, this paper documents significant heterogeneity in asset holdings, income, and income cyclicality across the distribution of Chilean households, as well as considerable income risk. Considering this evidence, we compare the transmission mechanisms between Heterogeneous-Agent New-Keynesian models with search and matching (SAM) and sticky wage frictions (SW), and between one-liquid-asset (OA) and two-asset (TA) specifications. We propose a decomposition of consumption responses into direct, indirect, average, and cross-sectional effects. We show that the transmission mechanisms depend on the labor market setup: in SAM-OA the transmission operates through average and direct effects, while in SW-OA it is through cross-sectional effects. Assets also matter, the transmission in the SW-TA has stronger direct and average effects than SW-OA.

The consumption expenditure response to unemployment: Evidence from Norwegian households

This paper examines heterogeneity in household income and consumption responses to unemployment, using granular administrative tax data from Norway. On average, unemployment results in a significant, lasting income reduction, accompanied by a decrease in consumption expenditures of between one-third to one-half of the income loss. We find that households with greater liquid assets at the outset experience less of a decline in consumption, whereas those with higher levels of debt encounter a more substantial decrease. Notably, also the interaction of liquid assets and debt holdings matters for the consumption response. While households with larger initial liquid asset holdings on average respond less, the analyses show that this is not the case among households that simultaneously hold substantial amounts of debt, thus adding to a more nuanced view of the importance of household heterogeneity for economic outcomes. Furthermore, our investigation into heterogeneity across family composition and child age uncovers distinct patterns in consumption responses, highlighting the varied impacts of unemployment. Lastly, we find that spending patterns, as indicated by the marginal propensity to consume (MPC), become more pronounced during recessions.

The Impact of Forestry Industry Integration on the Forest Farmers' Income in China: A Theoretical and Empirical Study

Transforming the forestry development model and promoting the integrated development of the forestry industry has become an important way for forestry to break through development bottlenecks and achieve efficiency enhancement, prosperity of forest areas, and income increase for forest farmers. In this study, we have theoretically elaborated on the mechanism by which the integrated development of the forestry industry affects the income level of forest farmers. In terms of empirical research, we use the inter provincial panel data from 2005 to 2019 to empirically test the individual heterogeneity, regional heterogeneity, and spatial spillover effects of forestry industry integration on forest farmer income with the help of fixed effect model, quantile regression model and spatial panel model. Results showed that, firstly, the level of integration in the forestry industry is on the rise, with most provinces in the middle or high integration stage. Among them, the Northeast region has the highest level of integration. Secondly, there is a positive spatial correlation in the income of Chinese forest farmers, and the spatial correlation is gradually increasing. The income of forest farmers in coastal provinces is relatively high, as indicated by the presence of HH clusters. Thirdly, the integration of the forestry industry has significantly improved the income level of forest farmers, and there are group heterogeneity and regional differences. The heterogeneity of income is reflected in the increasing income effect of forestry industry integration, which continuously strengthens with the improvement of the income level of forest farmers. Regional heterogeneity is mainly manifested in the Northeastern, Eastern, and Central regions. The integration of forestry industries can significantly promote the growth of forest farmers’ income, while in the Western regions, the income increase effect of forestry industry integration has an inhibitory effect, but is not significant. Finally, the integration of the forestry industry has significant spatial spillover effect and the indirect effect is greater than the direct effect. However, the spillover effect coefficient is 0.007, which is still at a relatively low level, and the diffusion effect generated by factor flow still needs to be strengthened. Efforts to boost integrated forestry industry development will broaden the income channels of forest farmers by leveraging high productivity of the agglomeration effects, diffusion effect and demonstration effect, strengthening regional communication and cooperation, and promoting integrated forestry industry development with adjacent regions. This study helps to correctly grasp the relationship between forestry industry integration and farmers’ income, and provides decision-making reference for local governments to formulate policies for increasing farmers’ income in the development of forestry industry integration based on actual situations.

Market size, income heterogeneity, and trade

This paper studies the effects of market enlargement in the context of monopolistic competition, variable markups, and income heterogeneity. Market enlargement increases product diversity and entices firms to reduce prices and markups due to pro-competitive effects. It benefits all individuals but more high-income ones. The strength of the market enlargement effect is independent of income inequality for Pollak’s (1971) preferences. In an open economy, the market enlargement of one country reduces prices globally while it fosters firm entry in this country and exit in the other country. Welfare gains are also larger for higher-income groups. A calibration exercise suggests that effects on market outcome and welfare gains are sizable.

The heterogeneous impacts of climate finance on environmental sustainability and social welfare in developing countries

PurposeDue to their limited capacity for adaptation and dependence on natural resources for economic growth, developing countries (DCs) tend to be more prone to climate change. It is argued that climate finance (CF) is a significant financial innovation to mitigate the negative effects of climate variation. However, the heterogeneous impacts of CF on environmental sustainability (ES) and social welfare (SW) have been masked. Thus, this study aims to investigate the heterogeneous effects of CF on ES and SW in 80 CF receipt DCs from 2002 to 2018. This study also aims to investigate the effects of CF on ES and SW based on population size, income heterogeneity and the type of CF.Design/methodology/approachThe method of moments quantile regression (MMQR) with fixed effects is utilized. Alternatively, the fully modified least square (FMOLS) and dynamic least square (DOLS) estimators are used for the robustness test.FindingsThe findings revealed that DCs with the lowest and middle quantiles of EF, carbon dioxide (CO2) emissions and human development exhibit large beneficial impacts of CF on ES and SW. In contrast, the positive effects of CF on ES breakdown for countries with the largest distributions of EF and CO2 emissions. Besides, the impacts of CF on ES and SW depend on income heterogeneity, population size and the type of CF.Practical implicationsThis study calls for a framework to integrate CF into all economic development decisions to strengthen climate-resilient SW and ES in DCs.Originality/valueTo the best of the authors’ knowledge, this is the first study to investigate the effects of CF on ES and SW in a wide range of DCs. Thus, it complements existing related literature focusing on the effects of CF on ES and SW.

Household income and tourism expenditure: an unconditional quantile regression approach

ABSTRACT Although a growing number of studies have investigated the nexus between income and tourism demand, little is known about the heterogeneous income elasticity of tourism expenditure. This study fills this gap by analysing the 2018 China Family Panel Studies household survey data using an unconditional quantile regression model. The findings show that tourism expenditure is income inelastic regardless of the tourism expenditure quantile. Specifically, a 1% increase in per capita household income increases per capita tourism expenditure by 0.514–0.637%. In addition, household income affects tourism expenditure heterogeneously; the effects are larger for households at the higher tourism expenditure quantiles. Furthermore, the income elasticity of tourism expenditure is larger in relatively affluent and advanced regions – it is greater in urban areas relative to rural areas and in the eastern region of China relative to its western region.

Centrality in the macroeconomic multi-network explains the spatiotemporal distribution of country per-capita income

This paper empirically investigates the role played by cross-country spillovers in shaping spatiotemporal differences in country income. While existing literature focused on effects captured by direct spillovers with partner countries only, here we take a complex network perspective to explore whether the global embeddedness of countries in the macroeconomic multi-network may significantly impact income, net of country local characteristics such as local foreign exposure. We employ data for the period 2000–2020 to build a time sequence of 3-layer multi graphs, with countries as nodes and links weighted by the intensity of bilateral relations in international trade, finance and human migration. Using panel-regression techniques, we then ask if country (eigenvector) centrality in the multi network can account for parts of the observed heterogeneity in country per-capita income, both cross-sectionally and over time. Robustly across a number of alternative specifications of the empirical model, we find that being more central significantly boosts country income. This implies that income-enhancing technological spillovers are not only channeled via local exposure, but also through indirect interactions with more distant nodes.

Heterogeneous Retirement Savings Strategy Selection with Reinforcement Learning.

Saving and investment behaviour is crucial for all individuals to guarantee their welfare during work-life and retirement. We introduce a deep reinforcement learning model in which agents learn optimal portfolio allocation and saving strategies suitable for their heterogeneous profiles. The environment is calibrated with occupation- and age-dependent income dynamics. The research focuses on heterogeneous income trajectories dependent on agents' profiles and incorporates the parameterisation of agents' behaviours. The model provides a new flexible methodology to estimate lifetime consumption and investment choices for individuals with heterogeneous profiles.

Adaptation to climate change: Air-conditioning and the role of remittances

Do remittances improve the ability of households to adapt to global warming? We try to answer this question by studying the behaviours of households in Mexico, a country that experiences a large and stable flow of remittances. Using an instrumental variable approach, we find an important role of remittances in the climate adaptation process. Remittances are used for adopting air-conditioning, which is an important cooling device for responding to high temperatures and to maintain thermal comfort at home. We exploit climate and income heterogeneity by showing that large differences exist in the use of remittances for climate adaptation between coastal and inland regions, as well as among different income groups. We conclude by quantifying the overall increase in welfare that households attain by adopting air-conditioning.

Identifying income heterogeneity determinants using the method of moments quantile regression

Prior studies have typically concentrated on poverty status to determine anti‐poverty measures; however, this approach cannot sufficiently detect income heterogeneity. This study employs quantile regression for panel data to investigate the Korean Labour and Income Panel Study 2003–2020. Moreover, it adopts both household‐ and community‐level variables and separates demographic groups as working‐age and older adults, considering Korea's severe old‐age poverty. The findings indicate that household‐level characteristics, such as householder's gender, physical health, and employment status, present heterogeneous effects across the income distribution. Second, low‐income households are more vulnerable to regional economic and labour market downturns than high‐income neighbours. Lastly, although the National Pension, a backbone of the public pension system, provides limited supports for retirees because it was introduced much later than other countries, it assists low‐income old adults more effectively. Therefore, this study suggests more tailored redistribution measures, considering heterogeneous effects of household‐ and community‐level environments, and a further expansion of the National Pension to mitigate old‐age poverty.

On the effects of income heterogeneity in monopolistically competitive markets

This paper studies the market and welfare effects of income heterogeneity in monopolistically competitive product markets in the context of nonhomothetic preferences. In a closed economy, where richer individuals' expenditures are less sensitive to price change compared to poorer ones', a mean-preserving contraction of income distribution entices firms to charge higher markups, reduce output, and fosters creation of new varieties. General equilibrium effects have a negative impact on poorer individuals and, in specific circumstances, on the whole population. In an open economy with free trade, lower income inequality in one country creates price divergence between trading countries. Lower inequality not only further decreases trade volumes and values but also creates a general equilibrium effect that may negatively affect poor individuals. Finally, general equilibrium effects are shown to be quantitatively nonnegligible.

The relationship between cooking fuel and health status from the perspective of income heterogeneity: Evidence from China

The health risks of cooking with solid fuels are widespread, especially among low-income people. Therefore, we decide to explore the impact of cooking fuel on the physical and mental health of Chinese residents and the heterogeneity of effects across income groups. This study estimates the potential relationship between household air pollution and health status by using data from the China Family Panel Studies (CFPS). Household air pollution is measured by different types of cooking fuels, and health status is evaluated from the perspective of respondents’ self-ratings of health, mental health, and interviewer-assessed health. The data comprises more than 100,000 samples between 2012 and 2019. We employ a Hierarchical Linear Model to infer the potential impact of household air pollution caused by cooking fuel on residents’ health. After adjusting control variables, we find cleaner cooking fuels such as solar energy and biogas are more conducive to residents’ health status. Our findings manifest that cleaner fuels and lower exposure to household air pollution are better for residents’ health. Low-income households are more likely to be affected by household air pollution. This study emphasizes the consequence of the potential health effects on residents due to household air pollution from cooking fuels and the uneven distribution of those effects. It is recommended that such factors as household air pollution risks, health, and environmental fairness and justice should be considered in the policy formulation process.

Income Heterogeneity and the Pollution Haven and Halo Hypotheses: Empirical Evidence from Developing Countries

Foreign direct investment (FDI) is commonly perceived as a catalyst for fostering economic growth in recipient nations. Nevertheless, new research findings indicate that multinational corporations may employ a specific approach to exporting pollution from nations with rigorous environmental regulations to emerging countries with less stringent legislation. This research investigates the influence of FDI on the environmental conditions of 80 developing nations from 2000 to 2019. The study employs the Least Squares Dummy Variable Corrected (LSDVC) methodology to analyse the data. The findings suggest that there exists a direct correlation between the influx of FDI and the occurrence of environmental contamination within developing nations. Nevertheless, it has been shown that there exists a noteworthy positive correlation between FDI and environmental deterioration, specifically in the case of nations classified as upper-middle-income nations. Furthermore, the findings substantiate a noteworthy correlation between the deterioration of the environment and the expansion of the economy, FDI, energy consumption, and population density. The findings of this study provide empirical support for the presence of both the Pollution Haven Hypothesis (PHH) and the Environmental Kuznets Curve (EKC) in middle-income nations. Additionally, this study offers recommendations aimed at assisting developing countries in their efforts to address environmental degradation.

Fiscal multipliers: A heterogenous‐agent perspective

We use an analytically tractable heterogeneous‐agent (HANK) version of the standard New Keynesian model to show how the size of fiscal multipliers depends on (i) the distribution of factor incomes, and (ii) the source of nominal rigidities. With sticky prices but flexible wages, the standard representative‐agent (RANK) model predicts large multipliers because profits fall after a fiscal stimulus and the resulting negative income effect makes the representative worker work harder. Our HANK model, where workers do not own stock, and thus do not receive profit income, predicts smaller fiscal multipliers. In fact, they are smaller with sticky prices than with flexible prices. When wages are the source of nominal rigidity, in contrast, fiscal multipliers are close to one, independently of income heterogeneity and price stickiness.