Decline In Inequality Research Articles

Back to the past: gains and losses in Brazilian society

During the first 15 years of the twenty-first century, Brazil’s economic growth and public policies were in the center of the debate on the growing “new middle class.” This new middle class is defined by people’s household income between the upper 10th percentile and the median (Neri, A Nova Classe Média, 2008). Although there has been a consensus about the increase in consumption and the improvement of living conditions for a significant proportion of the population, there is less agreement about the decline in inequality and the change in class distribution. Previous work was directed at challenging the very idea that Brazil had become a middle-class country during the first decade of this century, basically weighting class distribution against income distribution. In this article, we aim to step into the income distribution debate using six income groups as proportions of the median household per-capita income. Our data source is the National Household Sample Survey (PNAD-IBGE/Brazil) in 2001, 2008, and 2015. We analyze groups’ income distribution and characteristics using multinomial logistic models to take into account the effects of socioeconomic variables. We argue that there is significant stability in groups’ income structure during the period, revealing their resistance to inequalities (similar to the findings in the works of Piketty and Souza). We also indicate that the odds of being included in the upper-income categories are quite unequal, considering socioeconomic variables. Finally, we point out that the gains observed from 2001 to 2008 had faded by 2015 when the odds of being included in the upper-income categories were remarkably similar to those of 2001.

Lowering wage inequality with the minimum wage increase in Slovenia

The paper analyses the development of wage inequality in Slovenia after a 22.9% increase in the minimum wage in 2010. The analysis is based on individual-level data, covering all workers and firms in Slovenia over the 2005-2015 period. The descriptive findings show that with the minimum wage increase, wage inequality in Slovenia lowered. The effect was stronger for women, young and less-educated or low-occupations workers, which are characterised to be most affected by the minimum wage policy. Further, results also show that a decline in wage inequality was higher among workers employed in small and unincorporated firms and those working in market services.

The Massification of Higher Education and Income Distribution. Brazilian Experience from 1995 - 2014

Brazil has enjoyed a long period of growth and stability between the years 1995 to 2014. The macroeconomics performance outspread into the social field with an increased education coverage, decline in poverty and inequality. Within the scope of education, an especially important aspect was the massification of higher education. Since in Brazil higher education has the one that has the highest returns, a valid hypothesis would be to suppose that its massification should have contributed to the reduction of inequalities. The data we found does not support this hypothesis. Increased access to higher education seems to have had an opposite effect and soften the tendencies to equality. Every indicator we worked with in this article point to the same direction.

Unilateral Tax Policy in the Open Economy

This paper examines the effects of a unilateral reform of the redistribution policy in an economy open to international trade. We set up a general equilibrium trade model with heterogeneous agents allowing for country asymmetries. We show that under international trade compared to autarky, a unilateral tax increase leads to a less pronounced decline in aggregate real income in the reforming country, while income inequality is reduced to a larger extent for sufficiently small initial tax rates. We highlight as a key mechanism a tax-induced reduction in the market size of the reforming country relative to its trading partner, resulting in a firm selection effect towards exporting. From the perspective of a non-reforming trading partner, the unilateral redistribution policy reform resembles a unilateral increase in trade costs leading to a deterioration of terms-of-trade and a decline in both aggregate real income and inequality.

Lowering wage inequality with the minimum wage increase in Slovenia

The paper analyses the development of wage inequality in Slovenia after a 22.9% increase in the minimum wage in 2010. The analysis is based on individual-level data, covering all workers and firms in Slovenia over the 2005-2015 period. The descriptive findings show that with the minimum wage increase, wage inequality in Slovenia lowered. The effect was stronger for women, young and less-educated or low-occupations workers, which are characterised to be most affected by the minimum wage policy. Further, results also show that a decline in wage inequality was higher among workers employed in small and unincorporated firms and those working in market services.

Inequality, living standards, and growth: two centuries of economic development in Mexico†

AbstractHistorical wage and income data provide both normative measures of living standards, and indicators of patterns of economic development. This study shows that, given limited historical data, median incomes are most appropriate for measuring welfare and inequality, while urban unskilled wages can be used to test dualist models of development. We present new estimates of these series for Mexico from 1800 to 2015 and find that both have historically failed to keep up with aggregate growth: GDP per worker is now over eight times higher than in the nineteenth century, while unskilled urban real wages are only 2.2 times higher, and national median incomes only 2.0 times higher. From the perspective of inequality and social welfare, our findings confirm that there is no automatic positive relationship between economic growth and rising living standards for the majority. From the perspective of development, we argue that these findings are explained by a dual economy model incorporating Lewis's assumption of a reserve army of labour, and we explain why the decline in inequality predicted by Kuznets has not occurred.

Can the minimum wage reduce poverty and inequality in the developing world? Evidence from Brazil

• Increases in the minimum wage cause poverty and income inequality to decline in Brazil. • Within three months of a wage floor increase, the incidence of poverty falls by 2.8% and income inequality drops by up to 3.1%. • Effects on income distribution fade over time, particularly with respect to bottom-sensitive distribution measures. • Positive effects also diminish when the legal minimum is high relative to the median wage. • The elasticity of changes in the incidence of poverty with respect to changes in the minimum wage is approximately −0.1. Even though there is growing social support for higher minimum wages as anti-poverty policy tools, very little is known about their effectiveness in reducing poverty or inequality in the developing world. Latin America’s largest economy offers a fertile setting for shedding light on the issue, in being a large and data-rich country where frequent increases in the minimum wage can allow for direct estimation of influence on the distribution of income. Using a difference-in-difference estimator that takes advantage of substantial regional income variation and 21 increases in the Brazilian national wage floor, the study finds that within three months of these minimum wage hikes, poverty and inequality declined by 2.8% and 2.4%, respectively. Influence waned over time, particularly with respect to bottom-sensitive distribution measures, a development that is consistent with resulting job loses that fell more heavily among poorer households. The fact that the following annual hike in the minimum wage led to a renewed decline in poverty and inequality, suggests that potential unemployment costs were again overwhelmed by benefits in the form of higher wages among working individuals. However, evidence also establishes an inelastic relationship between wage floor hikes and changes in the incidence of poverty, as well as diminishing returns to the strategy when the legal minimum is high relative to median earnings.

Geographical and socioeconomic inequalities in the utilization of maternal healthcare services in Nigeria: 2003\u20132017

BackgroundMaternal mortality has remained a challenge in many low-income countries, especially in Africa and in Nigeria in particular. This study examines the geographical and socioeconomic inequalities in maternal healthcare utilization in Nigeria over the period between 2003 and 2017.MethodsThe study used four rounds of Nigeria Demographic Health Surveys (DHS, 2003, 2008, 2013, and 2018) for women aged 15–49 years old. The rate ratios and differences (RR and RD) were used to measure differences between urban and rural areas in terms of the utilization of the three maternal healthcare services including antenatal care (ANC), facility-based delivery (FBD), and skilled-birth attendance (SBA). The Theil index (T), between-group variance (BGV) were used to measure relative and absolute inequalities in the utilization of maternal healthcare across the six geopolitical zones in Nigeria. The relative and absolute concentration index (RC and AC) were used to measure education-and wealth-related inequalities in the utilization of maternal healthcare services.ResultsThe RD shows that the gap in the utilization of FBD between urban and rural areas significantly increased by 0.3% per year over the study period. The Theil index suggests a decline in relative inequalities in ANC and FBD across the six geopolitical zones by 7, and 1.8% per year, respectively. The BGV results do not suggest any changes in absolute inequalities in ANC, FBD, and SBA utilization across the geopolitical zones over time. The results of the RC and the AC suggest a persistently higher concentration of maternal healthcare use among well-educated and wealthier mothers in Nigeria over the study period.ConclusionWe found that the utilization of maternal healthcare is lower among poorer and less-educated women, as well as those living in rural areas and North West and North East geopolitical zones. Thus, the focus should be on implementing strategies that increase the uptake of maternal healthcare services among these groups.

Digital inequality in Austria: Empirical evidence from the survey of the OECD “Programme for the International Assessment of Adult Competencies”

Digitisation and rapidly emerging new technologies are transforming many aspects of life such as education, work, and leisure. These changes lead to a growing demand for new skills related to ICT use, computer literacy, internet use, or technical digital skills. However, the extensive literature on digital inequality provides evidence for significant differences in computer skills along the usual dimensions of social inequality. Due to the omnipresence of digital technologies in everyday life, it is all the more important to know the extent of digital inequality to be able to take appropriate measures to ensure that social participation does not degenerate into a question of social stratification in the Digital Age. In this paper, we provide empirical evidence for socio-economic digital inequality in Austria using survey data from the “Programme for the International Assessment of Adult Competencies” (PIAAC) conducted in 2011/2012.11The data set that supports the findings of this study is available as a scientific use file (SUF) for scientific research made available by Statistics Austria free of charge after conclusion of a data use agreement. We show, for Austria, that higher socio-economic background is positively related to digital problem-solving while being female is negatively correlated. However, when controlling for ICT engagement in everyday life, the positive effect of the socio-economic background only remains significant for groups of people with a very high socio-economic background while the effect of gender becomes statistically insignificant. Furthermore, based on Eurostat data we cannot identify a uniform trend towards a decline of digital inequality since 2012. Our results indicate that disadvantaged population groups in Austria should be encouraged and enabled to integrate ICT usage in their everyday life to reduce digital inequality.

Sub-Saharan Africa’s Diverging Inequality Trends, 1991-2011: A Structuralist Interpretation

The paper first documents the evolution of consumption inequality in 29 Sub-Saharan African countries over 1991-2011 on the basis of a new dataset accounting for over 80% of the population and GDP of the region. The study identifies a trend bifurcation, with 17 countries showing a decline in inequality and 12 an increase. Second, the paper aims at identifying the determinants of the observed inequality divergence by means of a theoretical discussion, summary review of the literature, and multivariate regression analysis. The results indicate that the main cause of such changes were shifts in output structure among sectors characterized by different levels of inequality. Within-sector inequality linked to skill-biased technical change significantly affected inequality in urban areas, but a lack of data did not make it possible to assess the impact of rising land concentration. Income redistribution by means of tax-and-transfers was limited, except in Southern Africa. As for the impact of international variables: an increase in the international prices of oil/metals and cash crops affected inequality by raising the value added shares of mining and agriculture. Remittances were found to be equalizing, while FDIs were un-equalizing and ODA non-significant. A decline in the incidence of HIV-AIDS and conflict intensity reduced inequality in a limited but statistically significant way.JEL Codes: C33, E26, J11, O11, Q15.

Socio-Economic Spillovers from Special Economic Zones

This study examines the socio-economic impact of special economic zones (SEZs) in Cambodia---a prominent place-based policy established in 2005. The paper employs a database on existing and future SEZs in Cambodia with matched household surveys at the district level and documents stylized facts on SEZs in a low-income country setting. To identify causal effects of the SEZ program, the paper (i) constructs an alternative control group including future SEZ program participants and districts adjacent to SEZ hosts; and (ii) employs a propensity score weighting technique. The study finds that entry of SEZs disproportionately benefits female workers and leads to a decline of income inequality at a district level. However, the findings also suggest that land values in SEZ districts tend to rise while wage levels remain largely unchanged relative to other districts. In addition, the paper tests for socio-economic spillovers to surrounding areas and for agglomeration effects associated with clusters of multiple SEZs.

Subjective wellbeing inequality in South Africa 2008–14: An unconditional quantile decomposition analysis

ABSTRACT This study analyses the sources of reduction in subjective wellbeing (SWB) inequality in South Africa over the period 2008–14. The unconditional quantile regression decomposition of mean gap finds differences in the effect of covariates along the SWB distribution, underlining the relevance of going beyond mean-based decomposition. Fall in SWB inequality is due to the increased level of SWB on the left-hand side of the distribution and a reduced level in the upper end of the distribution. Greater access to public amenities such as electricity and flushing toilets among those on the lower SWB distribution and lower returns to relative income and good health among those on the upper SWB spectrum can be said to be the major reasons for decline in SWB inequality. While the trend in returns to race has contributed to lower SWB inequality, employment stands out starkly as increasing inequality through both endowment and coefficient effect.

Inequality in the Dynamics of Development: Post-Globalisation Changes and 21st Century Challenges

Following Kuznets’ pioneering works, the growth-inequality nexus was stylised as an inverted U-shaped relation. As per that paradigm, economic inequality initially increases when a nation embarks upon a modern economic development process, but later on, declines as the development process cross a certain threshold. The paradigm roughly bears out the experience of the industrialised countries of Europe and North America from the beginning of the nineteenth century up to the mid-1970s. The inevitability of the pattern came under question when data from a broader range of countries became available by the 1970s. Then the post-globalisation experience of countries around the world virtually negated the falling part of Kuznets inverted U. Most countries which profited from globalisation in the form of upward shifts of their growth trajectories also experienced a rise rather than a decline in economic inequality. The present paper is a survey of the large and interesting literature on the changing nature of inequality before and after globalisation. The survey finds that inequality across countries has actually declined as a result of globalisation whereas inequalities within countries have almost invariably increased. Apart from usual factors such as bequest and skewed distributions of wealth, the new factors that have accentuated post-globalisation inequality are widening wage disparities, inequalities of opportunities, the onslaught of automation and rent-seeking activities of a section of the rich. The survey also notes how inequality has been moderated in some counties through effective taxes and transfer programmes. After summarising the arguments why growing economic inequality cannot be left unattended, the survey concludes with an outline of the policy choices which are being currently discussed in the academic and administrative circles.

Testing the regional Convergence Hypothesis for the progress in health status in India during 1980-2015.

The key challenges of global health policy are not limited to improving average health status, with a need for greater focus on reducing regional inequalities in health outcomes. This study aimed to assess health inequalities across the major Indian states used data from the Sample Registration System (SRS, 1981-2015), National Family Health Survey (NFHS, 1992-2015) and other Indian government official statistics. Catching-up plots, absolute and conditional β-convergence models, sigma (σ) plots and Kernel Density plots were used to test the Convergence Hypothesis, Dispersion Measure of Mortality (DMM) and the Gini index to measure progress in absolute and relative health inequalities across the major Indian states. The findings from the absolute β-convergence measure showed convergence in life expectancy at birth among the states. The results from the β- and σ-convergences showed convergence replacing divergence post-2000 for child and maternal mortality indicators. Furthermore, the estimates suggested a continued divergence for child underweight, but slow improvements in child full immunization. The trends in inter-state inequality suggest a decline in absolute inequality, but a significant increase or stationary trend in relative health inequality during 1981-2015. The application of different convergence metrics worked as robustness checks in the assessment of the convergence process in the selected health indicators for India over the study period.

WWII contract spending and inequality

ABSTRACT We find that the share of state-level income captured by the top 1% of income earners falls by 1.73pp in response to WWII contract spending. We also find a postwar permanent decline in top 1% income shares of 0.85pp attributable to wartime spending. This is half the average state-level decline in inequality during the war and one-fifth of the average postwar decline in inequality relative to 1940. We take this as evidence that WWII military spending induced permanent labour market changes in manufacturing that reduced inequality relative to its level in 1940.

Is income inequality reflected in consumption inequality in Iran?

ABSTRACT This paper presents a descriptive analysis of the evolution of labor supply, income, and consumption inequality in Iran using the 2005–2015 waves of the survey of Household Expenditure and Income (HIES). We document that the sharp decline in income and consumption inequality after the Subsidy Reform in 2010 was accompanied by a slight but persistent rise in respective inequality measures. We find that not only the level of income inequality is higher than consumption inequality but also that the fluctuations in income inequality are larger than those of consumption inequality. Moreover, income and consumption inequalities among rural households are higher compared to urban families. Finally, we show that within-group inequality, the inequality due to circumstances, can explain a considerable portion of the divergence observed between income and consumption inequalities.

Reducing global environmental inequality: Determining regional quotas for environmental burdens through systems optimisation

Reducing inequality is essential for sustainable development, yet our understanding of its many dimensions and driving forces is still limited. Here we study the global distribution of 25 environmental burdens encompassing natural resources (water, materials and land use) and air emissions, all related to activities underpinning human welfare. We find large disparities in inequality levels across burdens and a general, yet slow, decline in inequality in the period 1995–2009, explained mostly by the faster economic growth of emerging economies. Acknowledging that allocation issues may hamper greater equality, we propose a framework for an optimal allocation of quotas for environmental burdens respecting a maximum allowable inequality limit while ensuring a safe operation within the Earth’s ecological capacity. Our results shed light on the global distribution of environmental burdens and provide a roadmap for achieving a greater environmental equality using systems optimisation. It is hoped that this work will trigger further discussion on the need to address environmental inequality, currently missing in the Sustainable Development Goals, and open up new research avenues on the use of whole-systems approaches in solving global sustainability problems.

Labor Earnings Inequality in Manufacturing during the Great Depression

We study labor earnings inequality during the Great Depression using establishment-level information from the Census of Manufactures (COM). Inequality, as measured by the interquartile range in earnings per worker, declines by 10 log points between 1929 and 1933. However, by 1935, this difference has recovered to its 1929 level. In a decomposition, this decline and then rise in inequality is entirely explained by returns to observable factors, most notably the skill premium and regional differentials. The exit of establishments plays an important role in the initial decline in inequality but barely any role in the recovery.

How does inflation influence income inequality in Russia?

The paper studies the impact of inflation on income inequality in Russian regions. It was revealed that the reduction in inflation from double-digit rate to the Bank of Russia’s target did not help to mitigate inequality, but rather exacerbated it. We identified a group of products which changing price dynamics affects inequality. The price increase may lead to the decline in inequality through redistributive effect. It is shown that in Russia this effect is associated with the channel of unexpected inflation that results in real wealth transfer from more prosperous lenders to less well-off borrowers. The policy of inflation targeting, successfully implemented by the monetary authorities in recent years, has reduced the volatility of inflation and limited the operation of this channel. At the same time, quantitative estimates of the increase in inequality as a result of achieving price stability remain relatively low.

Inequality of opportunity in Brazil: decomposition of the sources of injustice between 2001 and 2014

PurposeThis article aims to measure inequality of income and opportunities at the national and state levels in Brazil, highlighting their acceptable and unacceptable components.Design/methodology/approachTo this end, a lower-bound estimate of income inequality (MLD) and inequality of opportunity (IOp) was developed using data from the National Household Sample Survey between 2001 and 2014.FindingsIt shows that the disparity of income measured by the MLD decreased 26.7 percent, while IOp measured by the IOp decreased 25.6 percent during that period. The decline in total inequality can be attributed to a 48.5 percent decrease of its unfair component and 51.5 percent decrease of its fair component. The average income of the most disadvantaged group (non-white women working in the informal sector) is shown to be only 29.5 percent of the income of the most advantaged group (formally employed white men). The groups at the greatest disadvantage were most benefited by the increase in income.Originality/valueBeyond comparisons among countries, analysis at the subnational level make it possible to identify how the process that generates inequality acts in each state, revealing patterns undetected in the aggregate analysis. Its decomposition generates two products that are useful to policy-makers. The first is a base estimate of the degree of IOp present in society, which may be expressed as an indicator of the degree of IOp. The second examines the portion of total inequality attributable to IOp.