Increase In Income Inequality Research Articles

Homoploutia: Top Labor and Capital Incomes in the United States, 1950–2020

Homoploutia describes the situation in which the same people are rich in the space of capital and labor income. We combine survey and administrative data to document the evolution of homoploutia in the United States since 1950. In 1950, 10 percent of top decile capital‐income earners were also in the top decile of labor income. Today, this indicator is 30 percent. This makes the traditional division to capitalists and laborers less relevant today. We find that the increase in homoploutia accounts for 20 percent of the increase in interpersonal income inequality since 1986.

법인세의 분배효과에 관한 연구

This study analyzes the effect of corporate income tax on income distribution in Korea. Studies on the economic effects of corporate income tax have mainly focused on investment and employment effects. This research trend is due to the prevailing idea that the investment effect of corporate income tax is decisive, employment and wages are determined incidentally, and that companies are merely conduits for distributing profits to shareholders. However, corporate income tax also affects the labor income share and household income distribution through changes in employment and wages, dividends, and internal reserve fund of a company. If corporate income tax cuts increase investment, but employment growth is weak and real wage growth rates falls short of labor productivity growth rates, the labor income share will decrease and household income inequality will widen. According to the results of the empirical research, the effects of corporate income tax rate on investment and employment are weak. The expanded investment is also capital-intensive, so the employment effect is not significant, and more the real wage increase does not keep up with labor productivity. As a result, a reduction in the effective corporate income tax rate lowers the labor income share and increases income inequality. Therefore, to increase the distribution effect of corporate income tax, corporate income tax should be reformed in a way that supports employment growth and real wage increases while including investment.

The causal effect of regulation on income inequality across the U.S. states

In the last several decades, despite widespread concerns about rising income inequality and increasing federal regulations in the United States, only a small group of researchers have tried exploring and understanding this relationship to date. Relevant empirical studies, overall, find regulations to exacerbate income distribution, thereby increasing income inequality within an economy. Recently, a similar association has been reported for the U.S. However, the existing analysis lacks evidence of a causal effect. Here, I unravel the causal impact of federal regulation of industries on income inequality across the U.S. states for the time span 1990–2013. For this, I address the potential endogeneity of regulation via a non-traditional identification strategy. The results are worth noting. There is reasonable evidence for regulation to be endogenous. Controlling for this yields a positive, statistically, and economically significant impact, implying a substantial increase in income inequality due to increased regulatory restrictions in a state. This contrasts with the findings of the naive estimation strategy, where the endogeneity issue is totally ignored.

The relationship of economic growth, income inequality and poverty: a study on developing countries

This study aims to examine the relationship between income inequality, poverty and economic growth in selected eight developing countries determined by the World Bank's Atlas method between 2000 and 2020. The problem of the study is the increasing and deepening income inequality and poverty in developing countries in recent years. In this context, panel data analysis was chosen to reveal the relationship between income inequality, poverty and economic growth in developing countries, and a wide data set such as gini coefficient, head number index, per capita national income, democracy index, human development index and misery index was used. Income inequality, poverty and economic growth were analyzed with three different models) and compared with each other. Considering the results of the analysis, the Durbin-Hausman cointegration test was conducted to reveal the existence of a long-term relationship between the variables, and the existence of a long-term cointegration relationship between the variables was determined. According to the results of Dumitrescu Hurlin causality test, a bidirectional causality relationship was found between the variables. According to panel regression analysis, it was determined that while per capita increases in national income increase income inequalities, increases in democracy and per capita income reduce poverty, and increases in democracy index increase per capita income. According to the results, various social, economic and political policies have been proposed to reduce income inequality and poverty and increase economic growth.

Health, economic growth, and Gini index in North America using a panel model

Objective: The objective of this paper is assessed the nexus among health status, economic growth, and the Gini index in North America and its countries using a panel model. Materials and Method: The materials consist of annual data regarding life expectancy, government health expenditure as percentage of the gross domestic product, Gini index, and gross domestic product at constant 2015 US$ for the period 2000-2019. The method applies a panel model for North America and its three countries: Canada, Mexico and The United States. North America diversity treatment among countries is dealt with fixed and random effects. Results: North America inhabitants health status are negatively influenced by an increasing income inequality, and a reduction on economic growth. The country that expends more in health care is The United States, follow by Canada and Mexico. The biggest reduction on life expectancy from an increase in income inequality is in The United States, followed by Canada and Mexico. Life expectancy increases when Canada and The United States experience economic growth. The countries with inarticulate health policy responses to an increase in income inequality are first Mexico followed by The United States. Conclusions: In North America and its countries an increasing income inequality reduces life expectancy, and government health expenditure. Economic growth benefits life expectancy and government health expenditure. Health status seems to improve with a reduction in income inequality and a greater public health expenditure. Therefore, policies that increases income inequality and reduces public health expenditure seems to be advocates of a reduction: in health status, population welfare and economic growth.

Asymmetric effects of oil price shocks on income inequality in ASEAN countries

Oil price shocks can have a substantial effect on income inequality. This study delves into the interplay between oil price shocks and income inequality in the Association of Southeast Asian Nations (ASEAN) countries, where income inequality is a critical issue. It aims to scrutinize the effects of both changes in oil prices and oil price volatility on income inequality while exploring the possibility of an asymmetric relationship. In addition, this study incorporates both oil-importing and -exporting countries, employing the panel model as well as causality analysis using data from 2000 to 2021. The results show that rises in oil prices increase income inequality in oil-importing economies but decrease it in oil-exporting countries. On the other hand, rises in oil price volatility induce increases in income inequality in both types of countries. The study further discovered that oil price shocks asymmetrically influence income inequality. Overall, oil price shocks tend to have larger adverse than advantageous effects on income inequality in oil-importing and oil-exporting economies.

Genetic diversity and income inequality: The case for Y-chromosome DNA diversity

This paper examines how patrilineal genetic diversity affects income inequality. We create a new measure of genetic diversity by implementing the notion of Y chromosome diversity. Using a cross section of more than 120 countries and controlling for other geographic and economic variations, we find that countries with higher genetic diversity also have higher income inequality. We show that this measure captures variations in income inequality that is unexplained by previous popular diversity indices and overcomes some of the empirical issues of those measures. Additionally, we find that countries with higher degree of genetic diversity have lower levels of social cooperation and government efficiency, which then leads to a decrease in redistribution and an increase in income inequality.

Does inflation worsen income inequality? A meta-analysis

Despite extensive econometric evidence, the research literature has been unable to draw firm conclusions regarding the effect of inflation on income inequality. In this paper, we apply meta-regression methods to a novel data set of 1767 estimates reported in 124 published studies that investigate the effect of inflation on income inequality. We distinguish between estimates that examine the effect of inflation on levels of income inequality and those that examine the effect of inflation on differences of income inequality. For level estimates, not controlling for moderator variables points to mild publication bias in favor of positive estimates (i.e., the current literature favors publishing studies that find that inflation increases income inequality), but publication selectivity does not hold once we control for a set of moderator variables. For difference estimates, mild publication bias in favor of negative estimates is found only once we control for moderator variables. In addition, our results suggest that inflation has a (small-to-moderate) inequality increasing effect for both level and difference estimates. Furthermore, we show that several factors influence reported estimates, including researcher choices concerning the measurement of inflation and inequality, the characteristics of data and estimation methods, and controlling for other components of inequality.

Raising Interest Rates for Improving Income

Abstract This paper illustrates a case where an increase of the interest rates improves the economic activity and reduces income inequality. This theoretical exercise deals with a simple model of disequilibrium with accountant identities of budget constraints. In addition, and following previous models, the effect of the COVID-19 shock is considered, by reflecting asymmetric repercussions that increase income inequality. A simple empirical exercise confirms some of the previous results. The proposed explanation is that, for the euro area, this shock has affected more middle-income households such as the retailers harmed by the compulsory lockdown who have increased their debts.

Trade unions and income inequality: Evidence from a panel of European countries

This article examines the relationship between trade unions and rising income inequality observed in advanced economies in recent decades. The role of trade unions in addressing increasing income inequality has been overlooked in empirical studies, despite its theoretical ambiguity. The baseline empirical model, estimated for 26 European countries from 2005 to 2018, specifies income inequality as a function of the trade union density rate, its squared value, and a set of control variables. Labour market institutions, other than unions, are incorporated into the model to assess the distributional effects of union density within the entire institutional framework. The authors find that union density has a statistically significant and persistent inverted U‐shaped relationship with income inequality.

Digital transformation and income inequality within enterprises – Evidence from listed companies in China

This study examines the influence of digital transformation on internal income inequality. The findings suggest that enterprise digital transformation has a discernible impact on reducing income inequality between managerial staff and ordinary employees. However, it also leads to an increase in income inequality between high-skilled and low-skilled employees. Mechanism tests reveal that enterprise digital transformation affects income inequality within firms by amplifying investments in research and development (R&D). Furthermore, during corporate digital transformation, a narrower compensation gap between the management and ordinary employees, as well as a wider compensation gap between high-skilled and low-skilled employees, significantly enhance corporate innovation performance.

Economic policy uncertainty and income inequality: unveiling the effects of friendly business environment

AbstractRecent pandemic in the form of COVID‐19 has been associated with increasing income inequalities because of high uncertainty around the globe. As a result, we examined the nexus between economic policy uncertainty (EPU) and inequality and how this relation is moderated by friendly business environment reflected by ease of doing business (EODB). To understand the relation among the different dimensions several techniques like fixed effects model, Driscoll and Kraay, and panel quantile regression were employed for a sample of 20 countries ranging for the period of 12 years. Our findings show that EPU contributes to higher levels of overall income inequality (Gini‐Index) and the results are heterogenous across countries, however the concentration of wealth among top 10% rich people gets reduced with increased EPU. Additionally, we find EODB moderating the impact of EPU on income inequality by mitigating the adverse effects of EPU on income inequality. Finally, we combined the results across different proxies and models to propose suggestive policy recommendations.

The Effect of Economic Growth, Education Level, and Energy Subsidies on Income Inequality in Indonesia in 2005-2019

Income equality is the ideal of every country, to achieve it requires cooperation between the government and the community. This study aims to determine the effect of economic growth, education level, and energy subsidies on income inequality in Indonesia. This study used secondary data in the form of time series in 2005-2019 obtained from the world bank, the central statistics agency and the Ministry of Finance. The method used in this study is multiple regression analysis. The results obtained in this study show that the variable level of education and energy subsidies actually increases income inequality due to suboptimal policies, while the economic growth variable does not reduce income inequality due to economic activities focused on the upper class.

The non-linear impact of financial development on income inequality: evidence from dynamic panel threshold model

PurposeThis study examines the non-linear impact of financial development on income inequality and analyses the mediators through which financial development affects income inequality.Design/methodology/approachThe study uses a dynamic panel threshold method with an endogeneous threshold variable on a comprehensive sample of 85 countries over the period of 1996-2015.FindingsThe author finds that financial development activities increase income inequality in developed countries. However, financial development promotes income equality in developing countries. Further, the study finds that education and institutional quality are the channels through which financial development has non-linear impacts on income inequality.Originality/valueThe study explores relatively new method to examine the nonlinear impact of financial development and also considers new dataset for the main explanatory variable.

Study on the impact of energy poverty on income inequality at different stages of economic development: Evidence from 77 countries around the world

To achieve the Sustainable Development Goals (SDGs), countries should prioritize reducing income inequality while ensuring people have access to affordable, reliable, and modern energy. This study clearly illustrates the nexus between three aspects of energy poverty and income inequality, focusing on 77 countries from 2000 to 2019. The empirical results indicate that access to electricity contributes to reduce income inequality, while access to clean fuels and renewable energy development can increase income inequality. The results of heterogeneity analysis further reveal that at the early stage of economic development, access to clean fuels and electricity can significantly reduce income. In contrast, the development of renewable energy worsens income inequality. However, renewable energy development becomes the primary factor in reducing income inequality as economic development progresses. Furthermore, the mechanism analysis shows that energy poverty can reduce income inequality by improving public health and educational attainment. Finally, this study provides valuable policy recommendations and scientific arguments for reducing income inequality, accelerating energy access, and achieving the SDGs.

Fair and inclusive markets: Why dynamism matters

AbstractWe argue that the economies that achieved inclusive growth, or high sustained and broad‐based growth while keeping a lid on the increase in market income inequality, are characterised by dynamism—a drive towards the acquisition of new capabilities in sophisticated products and processes. What a country produces and how much it competes domestically and internationally are important for achieving fair and inclusive markets. We show empirical evidence that dynamism, as measured by export sophistication, reduces market income inequality and poverty while increasing a broad concept of welfare. We explore policy options to steer industrial and market structures towards raising dynamism, thus providing growth opportunities for both workers and firms.

Incarceration history is associated with HIV infection among community-recruited people who inject drugs in Europe: A propensity-score matched analysis of cross-sectional studies.

We measured the association between a history of incarceration and HIV positivity among people who inject drugs (PWID) across Europe. This was a cross-sectional, multi-site, multi-year propensity-score matched analysis conducted in Europe. Participants comprised community-recruited PWID who reported a recent injection (within the last 12 months). Data on incarceration history, demographics, substance use, sexual behavior and harm reduction service use originated from cross-sectional studies among PWID in Europe. Our primary outcome was HIV status. Generalized linear mixed models and propensity-score matching were used to compare HIV status between ever- and never-incarcerated PWID. Among 43 807 PWID from 82 studies surveyed (in 22 sites and 13 countries), 58.7% reported having ever been in prison and 7.16% (n = 3099) tested HIV-positive. Incarceration was associated with 30% higher odds of HIV infection [adjusted odds ratio (aOR) = 1.32, 95% confidence interval (CI) = 1.09-1.59]; the association between a history of incarceration and HIV infection was strongest among PWID, with the lowest estimated propensity-score for having a history of incarceration (aOR = 1.78, 95% CI = 1.47-2.16). Additionally, mainly injecting cocaine and/or opioids (aOR = 2.16, 95% CI = 1.33-3.53), increased duration of injecting drugs (per 8 years aOR = 1.31, 95% CI = 1.16-1.48), ever sharing needles/syringes (aOR = 1.91, 95% CI = 1.59-2.28) and increased income inequality among the general population (measured by the Gini index, aOR = 1.34, 95% CI = 1.18-1.51) were associated with a higher odds of HIV infection. Older age (per 8 years aOR = 0.84, 95% CI = 0.76-0.94), male sex (aOR = 0.77, 95% CI = 0.65-0.91) and reporting pharmacies as the main source of clean syringes (aOR = 0.72, 95% CI = 0.59-0.88) were associated with lower odds of HIV positivity. A history of incarceration appears to be independently associated with HIV infection among people who inject drugs (PWID) in Europe, with a stronger effect among PWID with lower probability of incarceration.

Impact of income inequality on climate change in Asia: the role of human capital

Applying different regression estimators on balanced panel data, this article examines the impact of human capital and income inequality on climate change in Asian countries during the period 2007–2020. Results by the GMM estimator confirm that increases in income inequality and investments in human capital exacerbate environmental degradation in Asian countries. However, among the three variables that represent human capital, only HC3 (Gross enrollment ratio for tertiary school) plays a role in reducing the impact of income inequality on emissions of carbon dioxide. In addition, the study also provides evidence on the impact of other factors on CO2 emissions such as renewable energy, economic growth, population, output in the agricultural and services sectors, trade openness, government expenditure and total investment in the economy. Besides, some important policy implications have been suggested to aim at securing sustained economic growth in Asia.

The Global Dimension of the CAP Debate: Between a Rock and a Hard Place

SummaryExuberant expectations about what EU agriculture can and should deliver in policy areas beyond its scope often contrast sharply with both farm realities and contradictions in the behaviour of individuals as citizens and consumers. This has polarised the CAP policy debate, and erroneously pushes for a choice between prioritising either climate action or food security. Recent developments, including the war in Ukraine, added to concerns about uncertain and volatile future price prospects. Food price prospects and population growth impacts are pivotal in the debate about food security as higher food costs, prospects for higher energy costs driven by the green transition and increasing income inequalities put households in both developed and the developing world at risk with respect to food affordability. Adding trends of global population growth, especially in Africa, creates a clear challenge of availability in certain products and regions. The EU's underestimated and misunderstood record of producing more with less could help EU agriculture to positively contribute to addressing both food security and climate change. However, further improving its performance requires re‐opening the debate in three priority areas where the EU must come clear on its stance and future contribution – productivity, science and trade.

Monetary Policy and Inequality

ABSTRACTWe analyze the distributional effects of monetary policy on income, wealth, and consumption. We use administrative household‐level data covering the entire population in Denmark over the period 1987 to 2014 and exploit a long‐standing currency peg as a source of exogenous variation in monetary policy. We find that gains from softer monetary policy in terms of income, wealth, and consumption are monotonically increasing in ex ante income. The distributional effects reflect systematic differences in exposure to the various channels of monetary policy, especially nonlabor channels (e.g., leverage and risky assets). Our estimates imply that softer monetary policy increases income inequality.