Income Inequality Research Articles

Inequality Bands: Seventy-five years of measuring income inequality in Latin America

Abstract Drawing on a comprehensive compilation of quantile shares and inequality measures for 34 countries, including over 5600 estimated Gini coefficients, we review the measurement of income inequality in Latin America and the Caribbean over the last seven decades. We find that there is quite a bit of uncertainty regarding inequality levels for the same country/year combinations. Differences in inequality levels estimated from household surveys alone are present but they derive from differences in the construction of the welfare indicator, the unit of analysis, or the treatment of the data. With harmonized household surveys, the discrepancies are quite small. The range, however, expands significantly when –to correct for undercoverage and underreporting especially at the top of the distribution– inequality estimates come from some combination of surveys and administrative tax data. The range increases even further when survey-based income aggregates are scaled to achieve consistency not only with tax registries but with National Accounts. Since no single method to correct for underreporting at the top is fully convincing at present, we are left with (often wide) ranges, or bands, of inequality as our best summaries of inequality levels. Reassuringly, however, the dynamic patterns are generally robust across the bands. Although the evidence roughly until the 1970s is too fragmentary and difficult to compare, clearer patterns emerge for the last fifty years. The main feature is a broad inverted U curve, with inequality rising in most countries prior to and often during the 1990s, and falling during the early 21st century, at least until around 2015, when trends appear to diverge across countries. This pattern is broadly robust but features considerable variation in timing and magnitude depending on the country.

Financial Commitment to a Greener Future: Investigating Environmental Protection Spending and Its Impact on Sustainable Development Goals

This research examines the role of environmental protection expenditure (EPE) in advancing the Sustainable Development Goals (SDGs) within seven Asian countries: China, Indonesia, Israel, South Korea, Malaysia, the Philippines, and Thailand. Focusing on SDG 6 (Clean Water and Sanitation), SDG 11 (Sustainable Cities and Communities), SDG 12 (Responsible Consumption and Production), SDG 14 (Life Below Water), and SDG 15 (Life on Land), the research assesses the impact of financial commitments on sustainable development outcomes. Using panel data analysis, the study evaluates the relationship between EPE and the selected SDGs while controlling for economic growth, foreign direct investment (FDI), income inequality, and trade as a percentage of GDP. Results show that increased environmental spending significantly improves clean water access, urban sustainability, responsible consumption, marine conservation, and terrestrial biodiversity. Countries with robust environmental protection frameworks and higher investments in green technologies demonstrate better SDG performance. South Korea's Green New Deal and China's renewable energy investments serve as successful models of integrating economic growth with environmental sustainability. Conversely, Indonesia and the Philippines face challenges in enforcing environmental regulations, underscoring the need for stronger governance. The study highlights the importance of strategic financial commitments to environmental protection in driving sustainable development. It provides insights for policymakers, businesses, and international organizations aiming to align economic activities with sustainability goals. Emphasizing effective governance, innovative financing, and public-private partnerships, the research contributes to the discourse on achieving a greener future for Asia

Household welfare loss from energy price crisis: Evidence from China

The war in Ukraine and associated 2022 energy crisis had far-reaching effects. The energy price crisis causes varying degrees of households' welfare losses by directly increasing energy prices and indirectly increasing product costs along the supply chain. This impact is particular significant for developing countries and emerging economies with a large concentration of middle and low-income groups. In this study, we utilize a multiregional input-output (MRIO) model and micro-household consumption spending figures to simulate the effects of rising fuel costs, both directly and indirectly, on 24 expenditure segments in China. According to the energy prices schema, we find increased energy burdens deteriorate household welfare. In a dire scenario of a 50% increase in energy prices, 11.35% of households will fall into energy poverty because of a disproportionately high share of visible energy consumption, raising China's energy poverty rate from 11.61% to 22.96%. Residual impacts are passed on to households by raising the cost of producing goods, resulting in higher indirect energy consumption, and ultimately leading to a significant increase in the inequality of households' real incomes excluding energy consumption. Further analysis shows that it is more cost-effective to provide subsidies to relatively poor households for the consumption of various commodities, with subsidies for food, healthcare and medical services, and housing expenses being the most effective, than direct subsidization of energy prices by the government to reduce household welfare losses. The major findings of this study emphasize the impact of energy security challenges in household sector, that helps to assess the negative impact of the Russian-Ukrainian conflict on energy securities of emerging economies.

English Activity Programs in Libraries: Exploring the Potential of Children’s English Libraries as a Countermeasure for Educational Gaps

The Korean government has implemented various measures to address the disparity in English language proficiency stemming from income inequality. One such initiative is children’s English libraries. These libraries in Korea not only provide English-language books but also offer camps and English-language programs either for free or at low cost. In Japan, educational disparity has emerged as a significant issue in recent years, particularly regarding English education at the elementary school level, which has only recently been introduced as a school subject and appears to be exacerbating the gap. To investigate the feasibility of establishing children’s English libraries similar to those in Korea, this study conducted regular English-language activities at libraries akin to those in Korea in 2022 and 2023, and surveys were conducted among the children and their guardians.

Do Digital Adaptation, Energy Transition, Export Diversification, and Income Inequality Accelerate towards Load Capacity Factors across the Globe?

To limit global warming to 1.5 °C, it is imperative to accelerate the global energy transition. This transition is crucial for solving the climate issue and building a more sustainable future. Therefore, within the loaded capacity curve (LCC) theory framework, this study investigates the effects of digital adaptation, energy transition, export diversification, and income inequality on the load capacity factor (LCF). This study also attempts to investigate the integration effects of digital adaptation and energy transition, and digital adaptation and export diversification, on LCF. Furthermore, we explored how income inequality influences the LCF in economies. For this study, 112 countries were selected based on the data availability. Panel data from 2010 to 2021 were analyzed using the STATA software 13 application utilizing a two-step system generalized method of moments (GMM) approach. First, interestingly, our finding shows that digital adaptation and income significantly affect the LCF. An increase in income increases the LCF among the middle-income group of countries. Therefore, LCC is confirmed in this research. Surprisingly, energy transition, export diversification, and foreign direct investment negatively impact the LCF in the base model. Second, the impact of integrating digital adaptation and energy transition has a positive effect on LCF. Third, a negative correlation was observed between the interaction of export diversification and digital adaptation with the LCF. Fourth, a positive correlation was observed between the interaction of renewable energy and digital adaptation with the LCF. Finally, this study explores the impact of the energy transition, export diversification, and income inequality on the LCF with reference to the Organization of Petroleum Exporting Countries (OPEC). The result shows a negative effect between export diversification and LCF among OPECs at a 10% significance level. To improve the quality of our planet, policymakers must understand the forces causing climate change. By adopting a comprehensive perspective, the study aims to understand how these interrelated factors collaboratively influence the LCF thoroughly. Additionally, this research seeks to provide valuable insights related to energy transition, digital adaptation, and export diversification to policymakers, researchers, and stakeholders regarding possible avenues for cultivating a more joyful and sustainable global community.

Can revenue collection for public funding in health care be progressive? An assessment of 29 Countries

Most research on health care equity focuses on accessing services, with less attention given to how revenue is collected to pay for a country's health care bill. This article examines the progressivity of revenue collection among publicly funded sources: income taxes, social insurance (often in the form of payroll) taxes, and consumption taxes (e.g., value-added taxes). We develop methodology to derive a qualitative index that rates each of 29 high-income countries as to its progressivity or regressivity for each of the three sources of revenue. A variety of data sources are employed, some from secondary data sources and other from country representatives of the Health Systems and Policy Monitor of the European Observatory on Health Systems and Policies. We found that countries with more progressive income tax systems used more income-based tax brackets and had larger differences in marginal tax rates between the brackets. The more progressive social insurance revenue collection systems did not have an upper income cap and exempted poorer persons or reduced their contributions. The only pattern regarding consumption taxes was that countries that exhibited the fewest overall income inequalities tended to have least regressive consumption tax policies. The article also provides several examples from the sample of countries on ways to make public revenue financing of health care more progressive.

The Effect of Fintech Loans on Income Inequality in Indonesia

The Effect of Fintech Loans on Income Inequality in Indonesia

Health and income inequality: a comparative analysis of USA and Italy.

Socio-economic background is often an important determinant for health with low income households having higher exposure to risk factors and diminished access to healthcare and prevention, in a way that is specific to each country. Here, we perform a comparative analysis of the relations between health and income inequality in two developed countries, USA and Italy, using longitudinal and cross-sectional data from surveys. We show that the income class determines the incidence of chronic pathologies, associated risk-factors and psychiatric conditions, but find striking differences in health inequality between the two countries. We then focus our attention on a fraction of very disadvantaged households in the USA whose income in persistently at the bottom of the distribution over a span of 20 years and which is shown to display particularly dire health conditions. Low income people in the USA also display comorbidity patterns that are not found in higher income people, while in Italy income appears to be less relevant for comorbidity. Taken together our findings illustrate how differences in lifestyle and the healthcare systems affect health inequality.

Mothers with low incomes view both individual and structural interventions as potentially helpful for supporting early child development

Many developmental psychologists aspire to conduct research that informs interventions and policies to prevent income-related disparities in child development. Among growing researcher discussion about the value of interventions that target “structural” and resource-related correlates of income inequality and child development (e.g., housing, food, material goods, cash), rather than individual, person-centered correlates (e.g., parenting behaviors), the perspectives of mothers with low incomes may provide important context. 281 mothers with young children and low incomes rated various structural and individual interventions, framed as having minimal costs and entry barriers, for their perceived helpfulness. Analyses were pre-registered. Overall, mothers rated all interventions very highly, though they rated structural interventions as slightly more helpful than individual interventions. Mothers rated interventions they used in the past as less helpful than those they hadn’t previously used. An exploratory qualitative analysis revealed mothers’ desires for supports in other intervention domains beyond those addressed in our survey. Together, mothers’ responses indicated that they did not see individual interventions as inherently unhelpful due to a focus on individual states, knowledge, and skills. Implications for developmental psychology and intervention science are discussed.

It's not who you know, but who you are: Explaining income gaps of stigmatized-caste business owners in India.

Scholars across disciplines and around the world have diverted research attention to rising income inequalities across groups and strategies to reduce them. The literature has broadly identified human capital and social capital as two potential tools to facilitate economic mobility and to reduce inequalities. However, it is not known whether these tools work equally well for stigmatized groups, particularly in societies with systemic inequalities. Analyzing data from a pan-India survey, we show that business owners from stigmatized groups (i.e., Dalits in India, who are stigmatized as untouchables) experience a business income gap of around 16% compared to others, including those business owners who are from communities that are disadvantaged but are not similarly stigmatized. We find that, instead of being reduced, this gap in fact increases at higher levels of social capital, especially bridging social capital, illustrating the social processes of stigmatization that limit the benefits that Dalits can reap from social capital. By contrast, Dalits can reap similar income benefits as others from human capital. Our results show that human capital helps stigmatized groups mitigate the implications of stigma, but social capital does not.

Delaying retirement, income distribution and economic growth

In order to investigate whether postponing retirement age contributes to fostering shared prosperity, we develop a dynamic general equilibrium model incorporating delayed retirement dynamics alongside survival probabilities and heterogeneous human capital distribution across generations. This framework provides a comprehensive assessment regarding how postponing retirement age policies affect both income inequality and economic growth dimensions. Theoretical analysis reveals disparities between low- and high-income group investments in their offspring's education as well as savings behavior. Specifically observed are heightened educational investments by lower income households compared to their affluent counterparts leading to relatively accelerated growth rates for lower income family offsprings' human capital; consequently narrowing intergenerational wealth gaps thus mitigating overall income inequalities. Furthermore,the influence exerted by postponed retirements upon economic expansion hinges largely upon its relative impacts on household educational investments vis-a-vis parental human capital accumulation.Finally, numerical simulations demonstrate that within plausible parameter ranges, pushing back retirements could indeed stimulate economic advancement.

Comparative Analysis of Social Enterprise Development: A Case Study of Cambodia and Indonesia

Social enterprises have become a viable solution for tackling urgent social and environmental issues in developing economies. These organizations combine business strategies with a mission to generate positive social impact, particularly in areas that are often overlooked by traditional for-profit and government initiatives. Social entrepreneurship in the Southeast Asian Nations (ASEAN) region is gaining recognition as a means to address the growing income inequality and environmental degradation and empower women and girls. This study aims to investigate the social enterprise concept in Indonesia and Cambodia, with a specific emphasis on the legislation, operational model, and societal impact of these enterprises. The study employed a qualitative secondary data analysis through the search of existing literature related to social enterprise in both countries. The comparative examination of social businesses in Cambodia and Indonesia reveals shared impacts and diverse characteristics shaped by their socioeconomic and institutional contexts. Both nations possess social businesses that tackle social and environmental issues, foster job creation, strengthen communities, enhance the status of women, and safeguard cultural heritage. Disparities in priority areas, support systems, and economic contributions underscore the necessity to adapt social enterprise models to individual country situations. The study implies that key factors

The simple macroeconomics of AI

Abstract This paper evaluates claims about large macroeconomic implications of new advances in AI. It starts from a task-based model of AI’s effects, working through automation and task complementarities. So long as AI’s microeconomic effects are driven by cost savings/productivity improvements at the task level, its macroeconomic consequences will be given by a version of Hulten’s theorem: GDP and aggregate productivity gains can be estimated by what fraction of tasks are impacted and average task-level cost savings. Using existing estimates on exposure to AI and productivity improvements at the task level, these macroeconomic effects appear nontrivial but modest—no more than a 0.66% increase in total factor productivity (TFP) over 10 years. The paper then argues that even these estimates could be exaggerated, because early evidence is from easy-to-learn tasks, whereas some of the future effects will come from hard-to-learn tasks, where there are many context-dependent factors affecting decision-making and no objective outcome measures from which to learn successful performance. Consequently, predicted TFP gains over the next 10 years are even more modest and are predicted to be less than 0.53%. I also explore AI’s wage and inequality effects. I show theoretically that even when AI improves the productivity of low-skill workers in certain tasks (without creating new tasks for them), this may increase rather than reduce inequality. Empirically, I find that AI advances are unlikely to increase inequality as much as previous automation technologies because their impact is more equally distributed across demographic groups, but there is also no evidence that AI will reduce labor income inequality. Instead, AI is predicted to widen the gap between capital and labor income. Finally, some of the new tasks created by AI may have negative social value (such as design of algorithms for online manipulation), and I discuss how to incorporate the macroeconomic effects of new tasks that may have negative social value.

Implementation and challenges of sustainable tourism programs in Bali

The rapid growth of tourism in Bali has led to extensive development of accommodations, infrastructure, and facilities, positioning the island as a major tourist destination. However, this growth has brought significant challenges, including environmental degradation, cultural commodification, and social inequalities. The overexploitation of natural resources, unsustainable waste management, and deforestation have raised concerns about the island’s long-term ecological health. Additionally, the commercialization of cultural traditions and rising land prices have disrupted local communities and eroded the authenticity of Balinese heritage. In response, Indonesia has launched the "Decarbonization Roadmap for the Tourism Sector" to transition towards a more sustainable tourism model. This roadmap, supported by traditional values like Tri Hita Karana, emphasizes balancing economic growth with environmental preservation and cultural respect. Sustainable tourism practices such as community-based tourism and ecotourism are emerging as potential solutions, focusing on local participation and environmental conservation. Despite these efforts, significant challenges remain, including the uneven distribution of tourism benefits, income inequality, and the heavy reliance on tourism for Bali’s economy. Addressing these issues will require integrated and thoughtful approaches that prioritize sustainability and inclusive development.

Linguistic difference in the effect of organized programs on socioeconomic inequalities in breast cancer screening: ecological study in Switzerland.

The objective of this study is to examine how the effect of organized mammography screening programs on breast cancer screening participation differ between socioeconomic strata and how this relationship may be modified by the context of linguistic differences. Switzerland, marked by its diverse linguistic landscape, reflects cultural variations alongside differences in public health strategies. The goal of this study was to assess potential socioeconomic differences in regional mammography screening programs effectiveness to improve breast cancer screening participation. Data on 14 173 women in the regionally adapted breast cancer screening age range was drawn from five cross-sectional waves of the nationally representative Swiss Health Interview Survey (1997-2017). Socioeconomic indicators included education, household income, and employment status. Poisson regression was used to estimate the adjusted prevalence ratios of up-to-date (last 2 years) mammography uptake. Inequality was assessed using relative index of inequality and the slope index of inequality. Organized screening programs were generally effective and increased up-to-date mammography uptake by close to 20 percentage points in both regions. While in the Latin cantons, screening programs had no impact on socioeconomic inequalities in screening, it reduced inequalities for women with lower education in the German cantons. This modification effect of screening programs was not seen for income and employment-related inequalities and did not differ across linguistic regions. Public health agencies should consider the different cultural reception of programs as addressing these differences could help ensure that breast cancer screening initiatives are not only effective, but also culturally equitable across different socioeconomic groups.

Farmland rental participation, livelihood capital, and rural income inequality: evidence from rural China

ABSTRACT Using data from the China Family Panel Studies through a national rural survey, we analysed the effects of farmland rental participation and five types of livelihood capital on rural household income. We considered different livelihood strategies and applied the sustainable livelihood framework. Additionally, we used a regression-based Shapley-value decomposition method to examine how farmland rental participation and livelihood capital contribute to the rural income gap. Additionally, we investigated whether farmland rental participation is beneficial in reducing rural income inequality. The results show that farmland rental participation can lead to income benefits for the vast majority of farmers. Furthermore, farmland rental participation is not a primary factor contributing to the rural income gap. Household physical, human, and financial capital emerge as the three factors significantly influencing the income gap. The quantile regression results indicate that providing reasonable guidance to the farmland rental market is beneficial for narrowing the rural income gap. Implementing proactive policies aimed at enhancing the human, financial, and social capital of farmers can theoretically contribute to narrowing the rural income inequality.

Do macroprudential measures increase inequality? Evidence from the euro area household survey

AbstractBorrower‐based macroprudential policies—such as caps on loan‐to‐value (LTV) ratios and debt‐service‐to‐income (DSTI) limits—contain the build‐up of systemic risk by reducing the probability and conditional impact of a crisis. While LTV/DSTI limits can increase inequality at introduction, they can dampen the increase in inequality under adverse macroeconomic conditions. The relative size of these opposing effects is an empirical question. We conduct counterfactual simulations under different macroeconomic and macroprudential policy scenarios using granular income and wealth data from the Households Finance and Consumption Survey for Ireland, Italy, Netherlands and Portugal. Simulation results show that borrower‐based measures are associated with a moderate increase in wealth inequality, while the impact on income inequality is negligible.

Macrofinancial linkages and income distribution in the South African economy

ABSTRACT This study examines the impact of financial factors and income distribution on aggregate demand and growth in South Africa, using data spanning 1980–2019. We applied the autoregressive-distributed-lag bounds-testing procedure to uncover the effects over the short-and-long-run horizons. Additionally, we estimated impulse response functions to reveal further dynamic interactions. Our findings indicate that the key financial factors affecting the South African real economy are credit growth, interest rates, house prices and exchange rates. House prices play an important role, via the collateral channel, in driving consumption demand. Meanwhile, credit growth stifles investment demand in the long run. Interest rates constrain demand and growth, while the strengthening of exchange rates improves investment for firms. However, exchange rates impact negatively on GDP, presumably, through the trade-channel. We also found that income inequality suppresses consumption and investment demand, as well as GDP. This suppression appeared to be relatively pronounced in the short run for investment and growth, while for consumption, the suppressive impact was persistent. Therefore, we recommend that any policy framework aiming to galvanise growth should not overlook the problem of inequality. Otherwise, any headway made on growth will be back-pedalled by the demand-reducing impact of high-income inequality.

Declining research productivity and income inequality: A centenary perspective

Research productivity has been sharply declining since 1920. This decline has significant implications for inequality. Using an open-economy Schumpeterian growth model, we show that domestic research productivity influences income inequality through two opposing forces: a positive effect from increased asset returns and a negative effect from the erosion of innovation rents through creative destruction. In contrast, foreign research productivity affects inequality solely through the asset returns channel. By constructing a long historical data series for 21 OECD countries, we find that the asset returns channel has been the dominant driver of inequality over the past century. The reduction in both domestic and foreign R&D productivity accounts for 25% to 35% of the observed downward trend in income inequality over this period.

Income and consumption inequality trends: a comparative analysis between paid employees and the self-employed

This paper aims to analyze trends in income and consumption inequality for paid and self-employed households and examine to what extent changes in aggregate consumption and income inequality can be explained by changes in their permanent and transitory components over time using data from the Italian Survey of Household Wealth (SHIW) covering the period 1989-2016. The results obtained from the Generalized Method of Moments (GMM) analysis reveal differences in consumption and income inequality, as well as their permanent and transitory components, between self-employed and payroll households. In particular, self-employed households experience higher levels of both income and consumption inequality, the increase in total income and consumption inequality is mainly driven by an increase in its transitory component. Furthermore, findings from other descriptive measures of inequality, such as the Gini coefficient, the variance of the log, 90th/10th, and 50th/10th percentile ratios, support the notion that income inequality is higher than consumption inequality across all groups, with self-employed households exhibiting a more pronounced difference.