Income Inequality Research Articles

Central bank independence, income inequality and poverty: What do the data say?

Central bank independence, income inequality and poverty: What do the data say?

The distributional effects of climate change. An empirical analysis

The role of climate change on output has been studied extensively in the empirical literature. However, its distributional implications have received little attention. This paper attempts to fill this gap by investigating if climate shocks affect income inequality. Using a Vector Autoregression for a large cross-country panel, we identify the climate shock in the frequency domain as the shock that explains the bulk of the variance of climate variables in the long-run. An adverse climate shock is associated with an increase in measures of income inequality, affecting mostly low income households. The impact of the shock is larger in magnitude for low income, hot countries with a significant agricultural sector and low degree of adaptation to climate change.

The application of industrial robots and changes in capital-labour income disparity in China

The technological revolution, particularly the rise of industrial robots and artificial intelligence, has significantly impacted global economic growth and income disparity. This study examines the impact of industrial robot applications on the capital-labour income disparity in China, a country with the highest number of industrial robot applications and a commitment to reducing income inequality. The findings indicate that industrial robots intensify the income disparity between capital and labour, particularly in economically underdeveloped regions characterized by less sophisticated industrial structures, low levels of human capital, underdeveloped physical capital, and inadequate market economies. The promotion of industrial structure sophistication, enhancement of human capital levels, deepening of physical capital, and advancement of market development can mitigate the adverse impact of industrial robot applications on the income disparity between capital and labour. The study underscores the necessity of institutional reforms and targeted policies across these dimensions to address the negative impacts of new technologies.

Civil society ethos? Attitude differences between civil society elites and the population in Sweden

Previous studies have found that elites differ from the general population not only in terms of their demographic and social composition but also with respect to policy preferences and attitudes. When it comes to civil society organisations, the issue of representation and representativeness of top-level leadership is of particular relevance, since a small number of individuals are expected to act on behalf of groups and causes that are not well acknowledged or even suppressed by other societal actors. Using two survey studies, this study compares the demographic composition and attitudes of the top-level leaders of the most resourceful civil society organisations in Sweden with those of the general population. We find that civil society elites are not demographically representative of the general population and that they also differ in attitudes when it comes to levels of trust, political orientations, satisfaction with democracy, and acceptance of income inequality. What is more interesting, however, is that the differences in attitudes cannot be fully explained by the skewed demographic characteristics of the civil society leaders, indicating that there might be distinctive sets of values and attitudes underpinning a ‘civil society ethos’.

Unionization rates, inequality, and poverty in Canadian provinces 2000–2020

Unions can increase the power of workers through both collective bargaining and political avenues, potentially creating less income inequality and poverty. However, this potential may not be realized. Drawing on power resource theory, this study uses panel data to investigate the connection between unionization and two measures of after-tax inequality – the income share of the top 1% and the Gini coefficient – and three measures of poverty – the percentage of the population below the low-income cut-off, the average income of the bottom decile, and the percent of the population below the low-income measure – between Canadian provinces from 2000 to 2020. We find that unionization is negatively associated with income inequality in Canada. This relationship is statistically significant. However, we do not find evidence of any statistical association between unionization and poverty in Canada.

Unveiling complexities: Income inequality and inequality of opportunity in China

Unveiling complexities: Income inequality and inequality of opportunity in China

Healthcare Utilization and Discrepancies by Income Level Among Patients With Newly Diagnosed Type 2 Diabetes in Korea: An Analysis of National Health Insurance Sample Cohort Data.

The use of qualitative healthcare services or its discrepancy between different income levels of the type 2 diabetes (T2D) patients has seldom been studied concurrently. The present study is unique that regarding T2D patients of early stages of diagnosis. Aimed to assess the utilization of qualitative healthcare services and influence of income levels on the inequality of care among newly diagnosed patients with T2D. A retrospective cohort study of 7590 patients was conducted by the National Health Insurance Service National Sample Cohort 2.0 from 2002 to 2015. Insured employee in 2013 with no history of T2D between 2002 and 2012 were included. The standard of diabetes care includes hemoglobin A1c (HbAlc; 4 times/y), eyes (once/y) and lipid abnormalities (once/y). Multivariate logistic regression analysis was performed to examine the difference between income levels and inequality of care. From years 1 to 3, rates of appropriate screening fell from 16.9% to 14.1% (HbA1c), 15.8% to 14.5% (eye), and 59.2% to 33.2% (lipid abnormalities). Relative to income class 5 (the highest-income group), HbA1 screening was significantly less common in class 2 (year 2: odds ratio [OR], 0.78; 95% confidence interval [CI], 0.61 to 0.99; year 3: OR, 0.79; 95% CI, 0.69 to 0.91). In year 1, lipid screening was less common in class 1 (OR, 0.84; 95% CI, 0.73 to 0.98) than in class 5, a trend that continued in year 2. Eye screening rates were consistently lower in class 1 than in class 5 (year 1: OR, 0.73; 95% CI, 0.60 to 0.89; year 2: OR, 0.63; 95% CI, 0.50 to 0.78; year 3: OR, 0.81; 95% CI, 0.67 to 0.99). Newly diagnosed T2D patients have shown low rate of HbA1c and screening for diabetic-related complications and experienced inequality in relation to receiving qualitative diabetes care by income levels.

Analisis Pertumbuhan Ekonomi dan Ketimpangan Distribusi Pendapatan Provinsi Bali

This study aims to determine the Regency / City Classification in Bali Province based on the Klassen Typology, the condition of income distribution inequality between districts / cities, the relationship between income distribution inequality with per capita income, and whether the relationship forms the U-Reverse Kuznets Curve. This research is an analysis of secondary data obtained from BPS Bali Province. The analytical model used is Klassen Typology analysis, Williamson Index, Product Moment Correlation (Pearson). Klassen's Typology Results, Badung Regency and Denpasar City are included in Quadrant I area, Gianyar Regency is included in Quadrant III area, and the remaining 6 Regencies are included in Quadrant IV area. Furthermore, the Williamson Index Calculation in the Year of Observation shows that there is an imbalance in the Province of Bali which shows a downward trend. While the calculation result of Product Moment Correlation (Pearson) shows a very strong relationship between the Williamson Index and the Per capita GRDP and is negative, but the relationship does not form the Kuznets Curve to be a U-Reverse letter.

Within the cracks of the cosmic race: Income inequalities by race and ethnicity in Latin America

While a considerable body of literature has studied ethnic inequalities and discrimination in Latin America, it is only in recent years that a growing number of studies examine income inequalities by race, defined as a skin color gradation. Furthermore, most research equates ethnic self-identification with race, leading to confusion on the root of the discrimination. Hardly any studies have addressed ethnicity and race as separate but intertwined characteristics to examine income disparities. It is crucial to address this scarcity to properly comprehend the effect miscegenation narratives have had in the region and the current state of wage inequalities. Hence, in this paper, I employ data from the Americas Barometer to investigate race and ethnicity income gaps in 17 Latin American countries. To do so, I applied non-linear regressions and decomposition methods, which allowed me to (i) separate the observable and non-observable factors of the income gap and (ii) decompose them by race and ethnicity and look at their intersection. In addition to the principal analyses, I conducted a series of robustness checks to evaluate the results’ consistency and perform heterogeneity analysis to examine income inequalities per country. The results show substantial differences in the average income of the different ethnic and racial groups, mainly driven by differences in observable characteristics like years of education and employment status. In addition, the heterogeneity analyses indicate that ethnic and racial disparities vary across Latin America and can be explained partially by unobserved variables like discrimination. Overall, the results suggest that skin color and ethnic self-identification should be accounted for simultaneously when evaluating inequality.

Progressive Taxation and Social Welfare: Quantifying the Effects of the “German Tax-Reform 2000”

Abstract The German “Tax-Reform 2000” involved a strong reduction in the progressivity of labor income taxation. It led to a rise in overall labor income, but also increased income inequality. Utilizing data from the German Socio-Economic Panel (SOEP. 2016. Socio-Economic Panel (SOEP), Data for Years 1984–2016, Version 33) for the years 1998–2007, we employ a general equilibrium framework à la Antràs et al. (Antràs, P., A. De Gortari, and O. Itskhoki. 2017. “Globalization, Inequality and Welfare.” Journal of International Economics 108: 387–412) characterized by heterogeneous individuals. The model imposes a constant rate of tax progressivity and allows for a theory-consistent decomposition of social welfare that highlights the equity-efficiency trade-off, namely into (i) the fundamental social welfare level that would arise in a Kaldor-Hicks economy with lump-sum transfers, (ii) a correction term that accounts for the social cost of inequality à la Atkinson (Atkinson, A. B. 1970. “On the Measurement of Inequality.” Journal of Economic Theory 2 (3): 244–63) or Sen (Sen, A. 1970. Collective Choice and Social Welfare. Harvard University Press), and (iii) a correction term for the social cost of distortionary taxation. Our estimations show that the German tax system can be well approximated by the imposed tax schedule and that the reform implied a fall in the degree of tax progressivity. Under the baseline calibration, the numerical analysis yields the following results: First, the main driver of growth in social welfare from 1998 to 2007 was fundamental social welfare. Second, the counterfactual analysis shows that the reform resulted in an annual average income growth of 0.62 % and an increase in income inequality of 0.32 %, indicating an only modest increase in social welfare of 0.07 %. Third, the actual tax progression converged to its social welfare maximizing level.

Does income inequality undermine the carbon abatement benefits of artificial intelligence?

Artificial intelligence (AI) has great potential to address the carbon crisis, but unlocking its environmental benefits faces challenges. Income inequality, a key constraining factor, has received insufficient research attention. This study innovatively incorporates income inequality into the AI-carbon emissions relationship research framework. Using 2002–2019 panel data from 50 countries, we employ empirical methods to analyze how income inequality moderates the impact of AI technology on carbon emissions. Additionally, we utilize a panel threshold model to explore the nonlinear effects and heterogeneity of this moderating influence. Results show: (1) Overall, AI has a significant emission reduction effect; (2) Income inequality undermines the abatement benefits of AI, and when the income gap exceeds a threshold, the emission reduction effect of AI will be reversed; (3) The moderating effect exhibits heterogeneity across countries with different income levels, with the abatement efficacy of AI in low- and middle-income countries being more affected by inequality. The study reveals income disparity's constraint on AI's emission reduction potential, highlights the importance of considering social equity in AI development, provides a basis for designing fair and effective environmental policies, and offers insights into synergistically resolving the climate and inequality crises.

The declining affordability of dental care in New Zealand from 1978 to 2023.

In the early 2020s, nearly half of New Zealand adults reported that cost of treatment had prevented them from accessing dental care, with higher rates among Māori, Pasifika and individuals living in the most deprived areas. Unaffordable dental care may be explained by a rise in dental service fees over time relative to personal income, as documented in New Zealand between 1978 and 1993. However, there have been no contemporary estimates in New Zealand of how the affordability of dental care has changed. The aims of this study were to analyse the change in dental treatment fees and the personal income of New Zealanders from 1978 to 2023 and to explore differences in affordability of dental care by ethnicity. Average fees for dental treatments were sourced from surveys completed by practising New Zealand dentists. Earnings (from 1978) and personal income data (full population from 2000 and by ethnicity from 2008) were sourced from Statistics NZ and NZ Official Yearbooks. Inflation-adjusted changes in average fees, weekly personal earnings and income were calculated as a percentage change from 1978 levels for fees and earnings and from 2000 for personal income. For the five dental treatments with data available from 1978 to 2023, fees increased in the range of 75%-236%, while earnings increased by 46% over the same period. Fees for other treatments (with data available from 1981 to 2009) similarly increased and mostly surpassed changes in earnings. From 2008 to 2023 the overall increase in personal income (about 21% across all ethnic groups) kept pace with the rising cost of most treatments. However, due to persistent income inequalities, in 2023, Māori and Pasifika would need to spend a higher proportion of their weekly income (approximately 16% and 23% respectively) to receive the same dental treatments as NZ Europeans. Fees for dental treatments have risen markedly in recent decades, more sharply than the price of other goods and services.

IMPACT OF MICROFINANCE ON INCOME THROUGH SHGs IN MADURAI DISTRICT

This study examines the responsibility of microfinance institutions towards changes in the livelihood practices of the borrowers. The study is based on both primary and secondary data. The primary data were collected from the women Self Help Group members in Madurai District of Tamil Nadu by using interview schedules. Considering a total of 120 borrowers of Madurai, the impact of microfinance on their lives has been observed empirically by applying different statistical tools. In this study, impact of micro finance on income. For this the impact analysis of pre and post SHG members’ situation has been taken. This study contributes to the extant literature on microfinance by comparing pre-loan and post-loan phases and identified. Gini co-efficient of concentration ratio was used to measure the extent of inequalities in the distribution of income in the households of SHG members before and after joining SHGs. The upward shift in the Lorence curve towards the diagonal line for after joining SHGs, clearly shows that there is an improvement in the income inequality among the SHG members after joining SHGs. By considering the appropriate framework and approach, this study is explicable towards policymakers for designing further policies in this context and helps identify resources that need to flourish the current state in the future.

How the Level of Education Affects Income Inequality in China

The issue of education and income inequality is receiving increasing attention worldwide. This paper mainly focuses on the relationship between the level of education and income inequality. This paper provides a literature review and then delves into the social situation, societal phenomenon, and government policies in the Chinese context. It concludes that there is a close connection between education and income inequality. By comprehensively analyzing the correlation between education and income inequality in China, this paper reveals the relationship between the two by sorting out the effect of various factors within a given context. It offers implications for government to address and alleviate disparities in the country's socio-economic situation.

Delayed retirement, pension insurance and income inequality

PurposeTo investigate the potential of raising the retirement age and reforming pension insurance in mitigating intra- and inter-generational income inequality, thereby offering empirical support for governmental policy formulation.Design/methodology/approachA dynamic general equilibrium model with intertemporal iteration is developed to comprehensively assess the impact of policies raising the retirement age on income inequality, taking into account delayed retirement, survival probability, and pension insurance. The theoretical hypotheses are validated through simulation using MATLAB.FindingsThrough theoretical analysis, it is determined that, given certain assumptions are satisfied, raising the retirement age can effectively mitigate intra-generational income inequality, inter-generational income inequality under both the pay-as-you-go and fund accumulation systems. Simulation results indicate that, under current parameter settings, raising the retirement age can reduce the Gini coefficient. Furthermore, this study reveals that regardless of the pay-as-you-go or fund accumulation system, pension insurance serves as a mechanism for income redistribution and alleviating income inequality.Originality/valueIt offers a theoretical foundation for the government's policy on delayed retirement and endowment insurance.

Trusting others in a divided country: The determinants of social trust in South Africa

AbstractThis study investigates three key determinants of social trust to explain South Africa's social trust deficit: income inequality, confidence in institutions, and racial diversity. Despite the country's racially heterogenous society and segregated history, racial diversity arguments overlook alternative theories on the determinants of low social trust. We instead argue that the decline in social trust in South Africa can be explained by worsening levels of income inequality and declines in institutional trust in recent decades. Using the 2019 South African Reconciliation Barometer citizen survey data, the empirical analysis confirms that South Africans' confidence in institutions and their subjective perceptions of income distribution (or income inequality) have the strongest influence on social trust levels while racial diversity has a negligible effect. This is encouraging for a country with South Africa's racial diversity and troubled history. Instead, efforts to address South Africa's social trust deficit should focus on increasing citizens' confidence in institutions and addressing the high levels of income inequality. However, given the dire state of institutional confidence and income inequality in the country, it remains unlikely that these conditions will improve in the short term.

In search of lost social finance: How do financial instability and inequality interact?

The 2008 crisis and COVID-19 pandemic have highlighted the impacts of financial shocks on the vulnerable, emphasizing the challenges posed by financial instability to social finance. However, academic studies on financial instability and income inequality present mixed results. They often focus on specific instances of financial crises rather than evolving effects, examine uni-directional causality rather than interactions, and rely on slowly changing annual data instead of higher-frequency data. This study fills these gaps by examining the time-varying bidirectional relationship between financial instability and income inequality in the US, using a newly developed monthly database from January 1990 to March 2023. We demonstrate the existence of a vicious cycle in which persistent financial instability leads to increased income inequality, which in turn triggers financial crises through the harmful effects of credit deregulation. Based on these findings, we argue that a “Robin Hood strategy” of progressive taxation to improve access to quality education and healthcare could offer a more effective solution to tackle inequality than easing credit access for low-income groups through deregulation.

Causes and Consequences of Minimum Wage Variation in China

This paper examines the effects of minimum wage policies on employment and income inequality in China. It is focusing on the interplay with foreign direct investment (FDI) and regional economic disparities. Since 1978, China’s economic reforms have led to significant growth and rising wages. Yet exacerbated income inequality. The study finds that FDI raises wages. It is particularly for skilled labor, while regional variations in minimum wage standards reflect economic activity differences between coastal and inland provinces. Higher minimum wages have mixed employment effects. It is negatively impacting prosperous Eastern regions while benefiting Central and Western regions. Additionally, higher wages spur productivity improvements and innovation among firms. Policy recommendations include developing region-specific wage policies. It enhances protections for migrant workers, encouraging investment in productivity-enhancing technologies. It promotes balanced economic development and strengthens labor regulation enforcement. These measures aim to balance wage growth with employment stability. Hence, this analysis promotes equitable economic development across China.

The Influence of Open Unemployment Rates, Inflation and Minimum Wages on Income Inequality in The North Sumatra Region

Income inequality is the existence of differences in income in a society, giving rise to real income inequality in society. As a result, the rich get richer and the poor get poorer. In fact, when it comes to income inequality, the more flexible wages are, the greater the impact on employment. However, inflexible wages, which are said to be an inability to respond to changing market conditions, lead to ever-increasing poverty and inequality. This research aims to determine the correlation between the influence of open poverty levels, inflation and minimum wages on income inequality in North Sumatra. The Central Statistics Agency (BPS) noted that the level of expenditure disparity between residents in North Sumatra has widened since September 2023. The Gini ratio, which measures this inequality, is recorded as high. BPS Based on North Sumatra data, this large deviation was caused by the increase in fuel prices at the beginning of September last year. The research method used is Multiple Linear Regression which is processed using eviews 10 software. The approach used in this research uses a quantitative approach with associative analysis, with a population from the North Sumatra BPS report for 2014-2023. The results show that the open unemployment rate and minimum wage have an effect on income inequality. Therefore, the solution offered is a policy of establishing equal distribution of employment income by opening job vacancies and training as well as equal distribution of salary income which is applied evenly in various regions so as to reduce income inequality in North Sumatra

What contributes to rising inequality in large cities?

AbstractThis paper aims to analyze the trends in income inequality in large cities within a selected sample of OECD countries. Specifically, we consider a set of individual characteristics that account for changes in the income distribution and estimate their contribution to differences in inequality in large cities over the last two decades. We use a combination of reweighting techniques and recentered influence functions (RIF) to detect an upward trend in inequality within large cities. This result is mainly driven by changes in the returns to endowments rather than by changes in its distribution. Our findings suggest that these results are not of the same magnitude across the countries analyzed. A key finding is that the contribution to inequality of the skill premium is considerably higher in North American countries than in European countries.