Increase In Income Inequality Research Articles

Central Bank Independence and Oil Prices Impact on Macroeconomic Indicators

The central bank's independence and oil prices can influence macroeconomic indicators. Many articles are devoted to studying their influence on individual macroeconomic indicators. As it turned out, the study's results depend on the sample of countries and the interval. They can lead to contradictory conclusions: from a negative or positive effect to its complete absence. However, these issues have not been sufficiently studied for post-Soviet countries with peculiarities in their past development. This study examines the impact of central bank independence (CBI) and oil prices on economic growth, inflation, and income inequality in post-Soviet and developed countries from 2001 to 2020. Based on the analysis of panel data, it was found that strengthening the independence of central banks does not significantly impact economic growth, inflation, and income inequality in developed countries but contributes to their reduction in post-Soviet countries. Higher oil prices reduce economic growth and increase income inequality in developed countries and reduce economic growth, but do not affect income inequality in post-Soviet countries. An increase in oil price increments increases inflation in both samples of countries. The results of this study may be useful for developing macroeconomic policies.

Inequality in an Equal Society

AbstractA society in which everybody of a given age has the same income will exhibit substantial income and wealth inequality. We use this idea to empirically quantify inter‐cohort inequality – the share of observed inequality attributable to life‐cycle profiles of income and wealth – using data on male earnings and household wealth. We document that recent increases in income and wealth inequality in the USA and other developed countries are larger than observed rates would suggest due to favourable demographics. That is, while demographic change played a substantial role in the dynamics of income and wealth inequality until 1990, the stark increase in inequality in the USA and elsewhere ever since is despite not because of demographic change. Moreover, we show that there is important variation across countries in the level and trends in the extent of inequality that is due to lifecycle effects, and that taking this into account gives a more nuanced view of cross‐country comparisons.

Enhanced Unemployment Insurance Benefits in the United States during COVID-19: Equity and Efficiency

We assess the effects of the historically unprecedented expansion of U.S. unemployment insurance (UI) payments during the COVID-19 pandemic. The adverse economic impacts of the pandemic, notably the pattern of job losses and earnings reductions, were disproportionately born by lower-income individuals. Focusing on household income as a broad measure of well-being, we document that UI payments almost completely offset the increase in household income inequality that otherwise would have occurred in 2020 and 2021. We also examine the impacts of the $600 increase in weekly UI benefit payments, available during part of 2020, on job search outcomes. We find that despite the very high replacement rate of lost earnings for low-wage individuals, the search disincentive effects of the enhanced UI payments were limited overall and smaller for individuals from lower-income households. These results suggest that the pandemic UI expansions improved equity but had limited consequences for economic efficiency.

Exploring the association between income inequality and sleep in Canadian adolescents: A path analysis approach

ObjectivesAn estimated 30% of Canadian adolescents do not get the recommended 8-10hours of sleep. No prior study has examined the role of income inequality, the gap between rich and poor within a society, in adolescent sleep. The aim of this study is to examine the association between income inequality and sleep duration among Canadian adolescents, how this association differs by gender, and whether depressive symptoms, anxiety, and social cohesion mediate this relationship. MethodsMultilevel path models were conducted using cross-sectional survey data from 74,501 adolescents who participated in the Cannabis, Obesity, Mental health, Physical activity, Alcohol use, Smoking, and Sedentary behavior (COMPASS) study in 2018-2019. Income inequality was measured at the census division level and sleep duration, gender, depressive symptoms, anxiety, and social cohesion were measured at the individual level. ResultsA 1% increase in income inequality was associated with a 3.67-minute decrease in sleep duration (95% CI=−5.64 to −1.70). The cross-level interactions between income inequality and gender were significant, suggesting that income inequality has more adverse associations with sleep among females than males. Both depressive symptoms and anxiety were significant mediators, wherein greater income inequality was associated with higher levels of depressive symptoms and anxiety, which were in turn, associated with a shorter sleep duration. ConclusionInterventions that reduce income inequality may prevent depressive symptoms and anxiety and improve sleep in adolescents. Reducing societal income gaps may improve adolescent sleep especially in those attending school in high income inequality areas, females, and those experiencing depressive symptoms and anxiety.

Does Institutional Setting Contribute to the Public Debt — Income Inequality Relationship in Developing Economies?

In the context of increasing globalization, income inequality is one severe problem in several countries because it widens the income gap between the rich and the poor, which leads to social instability. Narrowing this gap has become one of the main agendas in many developing countries to satisfy the millennium goals proposed by the United Nations. Meanwhile, government expenditure is one crucial fiscal instrument as it contributes significantly to running the economy and overcoming economic cyclicality. In particular, governance/institutional can positively adjust the public debt — income inequality relationship in developing economies. The purpose of the study to identify the impact of institutional quality, public debt and their interaction on income inequality on a balanced data panel of 34 developing economies for the period 2002–2020. For monitoring endogenous problems and serial autocorrelation in empirical equations, two-step and one-step system GMM (Generalized Method of Moments) assessments are used. The results from the study show that public debt and the quality of institutions increase income inequality, but their interaction narrows it. These results seem to be counter-intuitive. Besides, education enhances income inequality in these economies. The results of the study provide some policy recommendations for reducing the inequalities in society through public debt and the quality of institutions in developing economies. Accordingly, governments in developing economies should use spending financed by public debt to support low-income individuals through social transfers throughout economic development. Importantly, they should spend more on education and health to help the poor improve their skills and knowledge, narrowing the income difference between the rich and the poor. In particular, they should be prudent in controlling and managing public debt to avoid a public debt crisis and social instability.

Income inequality of tribal households in Bangladesh: A decomposition analysis

This paper uses field survey data to examine farm and non-farm income to reduce income inequality among tribal households in Sylhet district, Bangladesh. It uses a decomposition method and a regression-based decomposition method to measure income and expenditure inequality by source of income as well as by household and family characteristics. For this, non-farm income was considered as an external transfer of total income to decompose the Gini index and as a potential substitute for farm income, taking into account household preferences. The results indicate that income differences exist between farm and non-farm income, thereby increasing income inequality. The endowment effect on household characteristics was positive and significant, directly supporting the increase in non-farm income per capita daily household expenditure. On the other hand, in terms of its components, non-farm self-employment income reduces income inequality, while non-farm wage income increases income inequality. At the 50th quantile results, an additional year of age of the household head increases the per capita expenditure of farm and non-farm households by BDT 300 to BDT 400, respectively. Moreover, the education of household heads also positively and significantly affects the per capita expenditure of non-farm households. As estimated by the 50th quantile, farm and non-farm households with graduation had higher per capita daily expenditure than household heads with primary education. Raising household education level and total farm household income to a better level, adopting farm-income enhancement programs, and enacting policies to increase alternative income opportunities that will shift income from non-agricultural to agricultural tribal households, reduce income inequality, and bring about the well-being of tribal society.

The motivating and mobilizing effects of inequality on civil conflict: Focusing on trade-induced labor market shocks

This article has two aims: (1) to identify the causal effect of income inequality on civil conflict and (2) to find the mechanism in which disadvantaged individuals can mobilize collective violence. Applying the Heckscher-Ohlin and Stopler-Samuelson theorems, this study hypothesizes that workers in land-rich countries – those who face contracted demand in the labor market and consequently a larger income disparity – will have a lower opportunity cost to engage in conflict as trade expands. Exploiting exogenous spatial variation in inequality due to the country’s factor endowment, together with time variation in tariffs arising from the economic liberalization, the work of this research documents a statistically significant and economically meaningful causal effect of inequality on civil conflict. Secondly, to identify the mobilizing effect of inequality, I test whether higher disparity in income distribution within an ethnic group breeds more rebellions initiated by the group. Esteban and Ray’s model claims that an increase in income inequality within an ethnic group makes collective violence more likely, because the poor within the group provide conflict labor, and the rich within the group provide resources for violence. By merging international census data that cover 115 million individuals from 221 ethnic groups with the groups’ conflict records, the analysis empirically identifies that when holding total ethnic income constant, within-group inequality that is proxied by the unemployment rate is strongly correlated with the group’s propensity to initiate armed conflicts. Shedding new light on the prevailing scholarly discord that exclusively chooses either one of class and ethnic cleavages as sources of intrastate violence, the findings of this study imply that if trade-induced labor market shocks increase within-group inequality, it motivates workers to participate in rebellions by lowering their opportunity cost of fighting and mobilizes ethnic collective violence by allowing the ethnic leaders to recruit combatants at a lower cost.

The causal relationship between income inequality and economic growth: evidence from panel data for Vietnam

ABSTRACT By analysing a panel dataset of 63 provinces of Vietnam (2004 − 2021), this study demonstrated that there was a causal relationship between income inequality (measured by the Gini coefficient, income gap, and the income share of the top 20%) and economic growth (expressed by real GDP per capita). The Kuznets curve, which is a well-known inverted U-shaped relationship between real per capita GDP and income inequality, was found by applying the robust fixed-effects method (FEM). In Vietnam during 2004 − 2021, economic growth first increased income inequality and later reduced it at a higher stage of economic development. This empirical evidence demonstrates that the Kuznets curve is an apparent empirical phenomenon in both national and provincial data. The Two-step System GMM Estimation examined the impact of income inequality and other socioeconomic factors on GDP per capita and showed the significant positive impact of income inequality, investment, employment rate, and education attainment, as well as a significant negative impact of headline inflation and the urbanization rate on economic development. Moreover, the results show that not literacy rate but educational attainment (the percentage of the population aged 15 years and older with a bachelor’s degree or higher) significantly influence economic growth.

A new labor movement? Assessing the worker upsurge in the contemporary U.S.

ABSTRACT This article explores the labor upsurge of the early 2020s and places it in an historical context. In the early 2020s, workers across the U.S. protested, organized, and walked out, part of an upsurge that produced remarkable results. There were union victories at some of the country’s best-known corporations, including Starbucks, Amazon, Google, Apple, and Trader Joe’s. Between 2021 and 2023, more than 360 Starbucks stores unionized, most through independent worker action. Over 8,000 workers also organized an Amazon warehouse in Staten Island, doing so with a grassroots union and a budget of just $120,000. Across the country, the number of strikes surged, petitions for National Labor Relations Board (NLRB) elections rose sharply, and union density increased for the first time in decades. Opinion polls also showed record levels of public support for unions. Rather than seeing the upsurge as new – as media accounts stressed – the article links it to longer-term trends, particularly many decades of bargaining givebacks, increasing income inequality, and long-term union decline. Across the U.S., workers reached their breaking point, and hit back. Short-term conditions – particularly the labor shortage produced by the pandemic – were important, but the upsurge also reflected longer-term grievances that built up over decades.

Nexuses between Food, Energy, and Water Consumption on Urban-Rural Income Gap in South-Eastern Asian Countries Using Difference in Difference in Modelling Technique

South Asian countries are still battling hunger and poverty, especially in rural areas. Empirical evidence attributes the urban-rural income gap to inadequate infrastructure, such as electricity and water supply. This article uses a difference-in-difference model to examine how emerging trends in Food, Energy, and Water (FEW) resources influence the urban-rural income gap. Using data from 2000 to 2019 from China, Indonesia, and India, the results showed that high food insecurity increases income inequality, whereas electricity supply significantly reduces the income gap. Thus, Asians should ensure a sustainable and equitable distribution of FEW resources to improve agricultural productivity and create jobs.

Bridging energy transition and income inequality: The moderating effect of institutional transparency

AbstractThe emergence of the United Nations' Sustainable Development Goals has instigated a transformative phase in policy formulation, emphasizing the multifaceted approach required to attain these objectives. Central to this pursuit is the management of diverse goals and their intricate interactions. This paper rigorously examines the pivotal role of institutional transparency in the nexus between energy transition and income inequality across 127 countries from 2012 to 2020, within the framework of the Sustainable Development Goals. The estimated results from the non‐balanced panel threshold model suggest the existence of a threshold effect of institutional transparency in the impact of energy transition on income inequality. On the whole, the process of energy transition has had a detrimental effect on income inequality, with institutional transparency serving to moderate it. When institutional transparency falls within the first regime (lnCPI ≤3.3322), the second regime (3.3322 < lnCPI <4.3041), and the third regime (lnCPI >4.3041), a 1% increase in the proportion of renewable energy consumption results in average increases in disposable income inequality of 0.0165%, 0.0143%, and 0.0128%, respectively. This suggests that institutional transparency has a positive moderating effect on the detrimental impact of energy transition on disposable income inequality. However, this result does not hold true for market income inequality. Additionally, there is an “inverted U‐shaped” relationship between economic growth and income inequality, indicating the negative impact of energy transition on income inequality would be offset by its contribution to economic growth.

Patent protection, externalities, and income inequality

AbstractThis paper develops a Schumpeterian growth model with considering consumption and leisure externalities. The main purpose of this study is to investigate the effect of patent protection policy on growth and inequality, as well as the interaction between policy effect and externalities. According to the log form utility function specification, this means that the elasticity of intertemporal substitution is unity. The following are the key findings of this paper. Patent protection policy encourages innovation and increases employment in the R&D industry, which enhances economic growth while increasing income inequality. In regard to externalities, an increase in the degree of consumption (leisure) externalities results in a higher (lower) growth rate and more (smaller) income inequality. When consumption (leisure) externality is greater intensity, the growth effect of patent protection policy becomes stronger (weaker), while its influence on expanding income inequality lessens (enhances). Finally, both the Pareto optimal patent protection policy and the optimal patent policy under the maximization of social welfare positively correlate with consumption externalities, but negatively correlate with leisure externalities.

Do natural resources rents reduce income inequality? A finite mixture of regressions approach

The World Bank report (2023) highlights that almost all types of natural capital, the global stock of resources and services provided by nature, are in decline while inequalities persist. Based on this context, the objective of this article is to analyze the effect of natural resources on income inequality in 73 developing countries over the period 2005–2020. Unlike previous works, this article examines the possibility that countries follow different inequality regimes and test the hypothesis that whether natural resources, reduce or increase income inequality depending on the inequality regime to which countries belong. We used a finite mixture regression model, and we found that our sample is best described by a model with five regimes of countries. The results show that the effect of natural resource rents on income inequality varies across five distinct regimes of countries. In regimes 1 and 2, natural resources have a positive effect on inequality, while in regimes 3 and 4, they have a negative effect on inequality. In regime 5, the effect is not significant. Furthermore, our analysis shows that countries that have low levels of political risk are likely to be in the regime where the dependence of natural resources decreases income inequality. These results clearly emphasize that for countries with abundant natural resources to fully benefit from reduced inequality, they must undertake strong reforms to reduce political risk. These reforms include improving the quality of the judicial system, intensifying the fight against corruption, and reducing investment risks.

Inflation-income inequality nexus in South Africa: the role of inflationary environment

ABSTRACT We estimate vector autoregressive models to examine the effect of the 3 to 6 per cent inflation target band in the inflation and income inequality nexus in South Africa. We use quarterly data spanning 1993Q1 to 2016Q3 to analyse how growth in income inequality responds to positive inflation shocks when inflation is within the 3 to 6 per cent target band versus when it exceeds 6 per cent. Evidence indicates that positive inflation shocks within the 3 to 6 per cent inflation target band lead to an insignificant decline in income inequality. However, greater income inequality results when inflation exceeds 6 per cent threshold. This suggests that the inflation-income inequality nexus in South Africa is nonlinear due to the 3 to 6 per cent inflation target range. Thus, inflation above 6 per cent is harmful as it increases income inequality. Policymakers should pursue policies that maintain the existing target band.

The impact of technological innovations on the environmental Kuznets curve: evidence from EU-27

The EKC hypothesis expresses the inverted U-shaped relationship between per capita income and environmental quality. In the literature, the role of technological innovations and income inequality on pollution is a relatively recent discussion in the studies testing the EKC hypothesis. The aim of this paper is to investigate the impact of technological innovations, income inequality, exports, urbanization, and growth on CO2 emissions in EU-27. In addition, while investigating this relationship, exports and urbanization are also considered and panel vector autoregression (PVAR) analysis is applied for the 2005–2019 period. According to the coefficient estimation results, while income inequality, exports, and urbanization increase pollution, technological innovations contribute to environmental quality. Also, the results demonstrated that the EKC hypothesis is invalid in these countries and there is a U-shaped relationship between growth and emissions. The causality test results revealed the presence of unidirectional causality running from all explanatory variables to CO2 emissions. Moreover, impulse-response graphs demonstrated that the reply of emissions to the shocks in the explanatory variables is similar to the long-run coefficient results. In conclusion, all available empirical evidence for this relationship highlights that income inequality and technological innovations should be considered in policy-making processes to ensure environmental quality in EU-27 countries.

Income inequality in developing countries: fiscal policy’s role amid uncertainty

ABSTRACT This study investigates the impact of uncertainty on income inequality in developing countries. Unlike prior studies, we analyse the role that the fiscal policy could play in the relationship. Using a sample of 66 developing countries over the period 2000–2020, we find at several levels of robustness that, uncertainty increases income inequality in developing countries, especially those with fiscal deficits and less fiscally disciplined. Additionally, we find that fiscal surpluses mitigate the negative effects of uncertainty on wealth distribution which in turn reduces income inequality. This result reveals the socio-economic stabilizing role that fiscal policy management could play during periods of uncertainty. Fiscal policy can maintain and enhance economic stability when countries face certain uncertainty.

Socioeconomic inequalities in adolescent mental health in the Nordic countries in the 2000s - A study using cross-sectional data from the Health Behaviour in School-aged Children study

BackgroundAdolescents in Sweden experience more mental health problems and lower mental well-being than adolescents in other Nordic countries. According to the literature, one possible explanation may be differences in income inequality. The at-risk-of-poverty rate varies significantly across the Nordic countries, and the highest rate is found in Sweden. The aims of the study were to examine socioeconomic inequalities in subjective health complaints and life satisfaction among adolescents in the Nordic countries during 2002 − 2018 and to explore whether subjective health complaints and life satisfaction were related to income inequality in terms of the at-risk-of-poverty rate at the country level.MethodsData regarding 15-year-olds from the Health Behaviour in School-aged Children study from five survey rounds (2002 − 2018) were used (n = 41,148). The HBSC Symptoms Checklist and Cantril’s ladder were used as measures of subjective health complaints and life satisfaction, respectively. The Family Affluence Scale, the Perceived Family Wealth item and the at-risk-of-poverty rate in each country were used as measures of individual-level socioeconomic conditions and country-level income inequality. Statistical methods involved ANOVA, multiple linear regressions and multilevel regression analyses.ResultsAbsolute and relative socioeconomic inequalities in both subjective health complaints and life satisfaction were found in all countries. Sweden showed average socioeconomic inequalities, Iceland the largest and Denmark the smallest. Country-level income inequality in terms of the at-risk-of-poverty rate was associated with a higher prevalence of subjective health complaints and lower levels of life satisfaction in all countries.ConclusionSocioeconomic inequalities in adolescent mental health and well-being persisted in Nordic countries in the 2000s. Increasing income inequality may have contributed to higher levels of SHC and lower LS in Sweden compared to the other Nordic countries. Policies improving families’ socioeconomic conditions and reducing income inequality at the country level are needed to improve and reduce inequalities in mental health and well-being among adolescents.

Structural reforms and income distribution: new evidence for OECD countries

Abstract This article examines the impact of labour market and product market reforms on income inequality for 25 OECD countries between 1970 and 2020, using the local projections approach and an updated narrative-based dataset of the reform indicators. Our results suggest that both types of (endogenized) market-oriented reforms increase income inequality, but the effects are small. Consistent with this finding is that counter-reforms lead to less income inequality. Our results also indicate that the inequality-increasing effect of market-oriented reforms is mostly a result of more income going to the top of the income distribution.

Examining the Determinants of Poland’s Middle Class Life Satisfaction

Recent works suggest that the increasing income inequalities decreased the middle class size and threatened life satisfaction (LS). However, no such studies link LS with middle-income class problems. The present study aims to fill this gap and characterize LS across the middle-income class in Poland. The main novelties are the Satisfaction with Life Scale (SWLS) to measure LS of the middle-income class in Poland and the methodological approach based on classification-regression trees (CART) to identify the determinants of LS. The analysis is conducted on the new database obtained from the survey of members of the middle-income class in Poland divided into three subgroups: the lower-middle-income class, the mid-income middle class, and the higher-middle-income class. For comparison, the low-income and high-income classes were also considered. Based on the SWLS results, relatively low diversity in middle-income class LS was identified. However, the inter-class comparison revealed that LS increased with belonging to a higher income class. The CART results support the primary importance of economic conditions such as, for instance, wealth and the level of savings in determining the middle-income class LS and show that their effect depends on their characteristics like professional status.

Causal Assessment of Income Inequality on Self-Rated Health and All-Cause Mortality: A Systematic Review and Meta-Analysis.

Whether income inequality has a direct effect on health or is only associated because of the effect of individual income has long been debated. We aimed to understand the association between income inequality and self-rated health (SRH) and all-cause mortality (mortality) and assess if these relationships are likely to be causal. We searched Medline, ISI Web of Science, Embase, and EconLit (PROSPERO: CRD42021252791) for studies considering income inequality and SRH or mortality using multilevel data and adjusting for individual-level socioeconomic position. We calculated pooled odds ratios (ORs) for poor SRH and relative risk ratios (RRs) for mortality from random-effects meta-analyses. We critically appraised included studies using the Risk of Bias in Nonrandomized Studies - of Interventions tool. We assessed certainty of evidence using the Grading of Recommendations Assessment, Development and Evaluation framework and causality using Bradford Hill (BH) viewpoints. The primary meta-analyses included 2,916,576 participants in 38 cross-sectional studies assessing SRH and 10,727,470 participants in 14 cohort studies of mortality. Per 0.05-unit increase in the Gini coefficient, a measure of income inequality, the ORs and RRs (95% confidence intervals) for SRH and mortality were 1.06 (1.03-1.08) and 1.02 (1.00-1.04), respectively. A total of 63.2% of SRH and 50.0% of mortality studies were at serious risk of bias (RoB), resulting in very low and low certainty ratings, respectively. For SRH and mortality, we did not identify relevant evidence to assess the specificity or, for SRH only, the experiment BH viewpoints; evidence for strength of association and dose-response gradient was inconclusive because of the high RoB; we found evidence in support of temporality and plausibility. Increased income inequality is only marginally associated with SRH and mortality, but the current evidence base is too methodologically limited to support a causal relationship. To address the gaps we identified, future research should focus on income inequality measured at the national level and addressing confounding with natural experiment approaches.