Lower Income Inequality Research Articles

Does entrepreneurship really reduce income inequality?

This paper examines whether entrepreneurial activities reduce social inequality. Using data from 62 countries, we find that countries with higher levels of entrepreneurship have lower income inequality. We also find that various cultural factors including gender wage gap and diversity indicators influence country-level entrepreneurship. When we use gender wage gap as an instrument to account for potential endogeneity in the decision to become an entrepreneur, the entrepreneurship-inequality relation becomes stronger. In economic terms, one standard deviation in entrepreneurship reduces income inequality by 6–11 %, relative to the mean. Together, these findings suggest that entrepreneurial activities can be an effective strategy for mitigating income disparities and promoting economic inclusivity.

Has competition law enforcement been effective in South Africa?

ABSTRACT The South African Competition Act was crafted on the basis that it could be used to address distortions and inequalities in the market through enforcing competition. A question which has arisen is whether competition enforcement has been effective given that many economic sectors are still largely dominated by monopolies, duopolies or oligopolies. In this study, I assess whether competition enforcement has reduced inequality in South Africa by studying the link between market power and inequality, following a competition intervention in selected product markets. Using the nonlinear autoregressive distributed lag model, I assess whether competition enforcement in the market for bread, maize meal, and sunflower oil, has been effective in increasing consumer welfare, by lowering income inequality through lower prices. The findings of this study suggest that firms in these markets abuse their market power even post-intervention, such that they can raise prices and reduce consumer welfare, increasing inequality indirectly.

Testing technological Kuznets curve implications on achieving sustainable development goal 10 in seven Asian countries

This study investigates the relationship between technological innovations, financial development, and income inequality implications on achieving Sustainable Development Goal 10 (SDG10) in seven Asian economies via testing the inverted U-shaped hypothesis of technological innovation on income inequality in the concept of technological Kuznets curve hypothesis. The significant contribution of this study is introducing the Technological Kuznets Curve (TKC) as an extension to the Kuznets curve (KC) framework to capture the impact of technological innovation on income inequality. The PMG/ARDL was applied to estimate the coefficients to accomplish the study's objective. The panel cointegration tests confirm that all variables are cointegrated with income inequality. The empirical findings validate the KC hypothesis and demonstrate that technological innovations contribute to reducing income inequality within the Kuznets curve framework in the long run. Financial development (money supply) was negatively correlated with income inequality. The study further validates the TKC hypothesis, revealing an inverted U-shaped relationship between technological innovations and income inequality. Financial development, measured by domestic credit to the private sector, also shows a negative correlation with income inequality within the TKC framework. However, the money supply demonstrates a positive link with income inequality. The study recommended the necessity to prioritize policies that support technological innovation through subsidies, encouragement for research and development, and collaborations between the public and private sectors will greatly lower income inequality and support achieving Sustainable Development Goal 10 (SDG10). Financial development significantly facilitates access to financial services and contributes to diminishing income inequality by building an effective and inclusive banking system (mobile banking services for poor communities), easing access to credit for emerging and small and midsize enterprises (SMEs), and money circulation. Governments should strategically allocate resources toward programs and initiatives that directly address income inequality and promote inclusive growth.

Effect of Economic Policies on Income Inequality: A Comparative Study of Switzerland and Bolivia

Purpose: The aim of the study was to examine the effect of economic policies on income inequality: a comparative study of Switzerland and Bolivia. Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries. Findings: Switzerland, with its advanced economy, implements progressive tax policies, robust social welfare programs, and equitable education systems, contributing to relatively low income inequality. In contrast, Bolivia, a developing nation, faces challenges in reducing income inequality due to less effective economic policies, limited social safety nets, and a larger informal sector. The study underscores that while Switzerland's policies effectively mitigate income disparities, Bolivia's efforts are hindered by structural economic issues and policy limitations. Unique Contribution to Theory, Practice and Policy: The Kuznets curve theory, the human capital theory & the social stratification theory may be used to anchor future studies of climate change on risk management practices in agriculture in Switzerland. From a practical perspective, the study provides actionable insights for improving the design and implementation of economic policies. The study offers several policy recommendations for both developed and developing economies. Policymakers in Switzerland should consider revising tax policies to address the increased burden on higher-income individuals and improve the overall equity of the system.

Low Income, Ill-being, and Gender Inequality: Explaining Cross-National Variation in the Gendered Risk of Suffering Among the Poor

Scholars have long investigated the positive link between income and well-being, including its gender difference. However, little is known about (1) how low income is linked to ill-being among women and men; and (2) how their association varies depending on societal-level gender (in)equality. Filling this knowledge gap is crucial not only for scholarship but for social policy to tackle income-based disparities of ill-being. In this study, using the European Social Survey and the joint European Values Study-World Values Survey data, we conduct country-specific regressions and cross-national multilevel analyses to examine the relationship between low income, subjective ill-being (SIB), and macro-level gender parity. We first confirm that low-income individuals, regardless of gender, are more likely than their affluent counterparts to suffer from SIB in many countries. This indicates the applicability of implications derived from conventional approaches focused on the positive association between higher income and better well-being to the studies on low income and SIB. Nevertheless, the SIB risk significantly differs depending on the degree of gender inequality in that (1) both women and men face a higher likelihood of SIB in gender-inegalitarian societies; and importantly, (2) the psychological penalty for the poor is intensified under such gendered circumstances, especially among men. These results suggest that gender inequality not merely induces women’s ill-being but punishes low-income men possibly by exacerbating pressure as a breadwinner and imposing stigmas when they cannot meet gendered social expectations.

FINANCIAL INCLUSION: DOES IT PLAY AN IMPORTANT ROLE IN A COUNTRY? REVIEW OF THE LITERATURE

Financial Inclusion (FI) is a key pillar of financial development and inclusive growth in a country. It plays an immense role and is showing an evolving nature around the world. Most research now investigates this concept mainly due to its supportive nature for a country’s development perspectives. Many countries make investments and pay considerable attention to initiating FI agendas and national FI strategies to improve the level of FI in their countries. Economic empowerment through formal financial sector activities, poverty reduction, lowering income inequality, enhancing savings and investments, and improving productivity are some of the contributory factors of FI. Reviewing nearly 50 past literature, this article attempts to develop new literature regarding the importance of FI for a country. Furthermore, the study examines FI definitions and barriers to FI. The findings of the literature reveal that FI directly supports the achievement of a country's growth objectives. The main contributory factors of FI are employment creation, reducing income inequality and poverty, smoothing the financial sector while maintaining financial system stability, and working with technological developments towards financial activities. However, there are several important bottlenecks such as lack of income, difficult access points due to long distance, barriers to digital finance and payments, and lack of financial knowledge. Affordable financial sector products and services for everyone tend to improve the level of FI. The outcome of the research provides valuable insight for policymakers and responsible authorities to take proactive actions to reach the FI targets by eliminating barriers to FI. In this regard, higher participation of the population towards the formal financial sector in a country is an important element, and actions should be arranged for the gradual transformation of people to achieve this target. The findings of this study further provide avenues for future studies and policy-level decisions, highlighting the fact that FI is an important concept for creating a financially inclusive country.

Trends and drivers of income inequality in the Philippines, Thailand, and Viet Nam since the early 2000s: A decomposition analysis

Income inequality has moderated in the Philippines, Thailand, and Viet Nam, three middle income countries in Southeast Asia, over the past two decades, with multiple factors at play. In each country, wage, nonfarm business income, and overseas remittance concentrations declined as less well-off households increasingly engaged in better-paying activities. In Thailand and Viet Nam, transfer incomes became more pro-poor and better targeted. Major contributors to lower income inequality also included a narrowing in regional disparity and a reduction in the urban-rural income gap, and, in the Philippines and Thailand, a fall in the education premium. This recent trend of moderating income inequality might be the combined outcome of rising income opportunities generated by structural transformation and government policies promoting social inclusion. Nonetheless, income inequality remains high, especially in the Philippines and Thailand. More policy efforts are needed to make growth more inclusive.

Consumption-Based Energy Footprints in Iceland: High and Equally Distributed

With the urgent global need to limit warming to 2 °C as well as a localized need in our case study to address rising energy demand amid electrical and thermal network limitations, a critical examination of demand-side energy reductions and the concept of energy sufficiency is needed. This paper contributes to the sparse literature on bottom-up analysis by utilizing Iceland—a leader in renewable energy generation—as a case study to explore the socio-economic factors influencing energy footprints. Our findings reveal significant energy footprints across various consumption domains, particularly housing and mobility, influenced by income levels, urbanization, and lifestyle choices. The study highlights the paradox of a high renewable energy supply leading to potential misconceptions regarding abundant and low-cost energy, resulting in substantial energy consumption-related environmental impacts. Using detailed household consumption survey data, this research provides insights crucial for developing sustainable energy policies that not only target technological advancements but also address the need for a reduction in energy demand and a shift towards energy sufficiency. This work marks a contribution to the literature through the provision of a case study of low income inequality and high energy footprints in a highly renewable energy system context. Further, this work is useful for Icelandic and international policymakers to understand in such high-demand contexts which consumption domains would be most relevant for sufficiency policies. This comprehensive analysis opens pathways for future research to further explore the intersections of energy consumption, socio-economic factors, and well-being, offering a nuanced understanding necessary for crafting sufficiency and demand-side policies aimed at a sustainable energy future.

Subsidy-Dominated Non-Farm Income Improves Herder Household Livelihoods and Promotes Income Equality in North Tibet, China

The non-farm sector is critical in supporting sustainable economies, alleviating poverty, and improving human well-being. However, the drivers of non-farm income and how it impacts income inequality remain underexplored, especially in alpine regions worldwide. Herein, we conducted face-to-face interviews using semi-structured questionnaires with 665 herder households across 54 villages in North Tibet from 2018 to 2020. We assessed the role of non-farm income in household economies and explored the determinants of household income using basic statistical methods, Gini coefficient analysis, and mixed-effects modeling. Our results showed that non-farm income accounted for approximately 80% of the total household income. It contributed to lower income inequality in rural North Tibet, with government subsidies playing a more vital role than wages and business income in this reduction. Results indicated that the number of migrant workers was the most significant positive predictor of both non-farm income and total household income, whereas livestock units dominated farm income. Given the modest contributions of livestock-derived income (~5%) and wage and business revenues (~18%) to overall earnings, this study suggests that policies should primarily focus on strengthening rural livestock husbandry. Simultaneously, it is imperative to foster environments that encourage entrepreneurship and non-farm activities and to expand access to skill-based training. Such initiatives and measures are essential for diversifying livelihood strategies and improving resident welfare in North Tibet.

Does Financial Inclusion Matter to Population Health? Insight From a Global Dataset

Currently, extensive empirical studies exist on the impact of financial inclusion on socio-economic outcomes such as economic growth, inequality, and poverty. However, research on financial inclusion and population health is limited and still at the infant stage. Therefore, this article adds to knowledge by inquiring into the health implications of financial inclusion using a global panel dataset for 121 countries between 2004 and 2020. After accounting for endogeneity with heteroskedasticity-based instrumental variable regression and cross-sectional dependency with the Driscol–Kraay estimator, we documented that financial inclusion improves population health outcomes. We found that the effect of financial inclusion on population health outcomes also depends on the level of information and communication technology penetration and existing socio-economic conditions in a country. Following this, we showed that financial inclusion improves population health outcomes in countries with lower income inequality and higher GDP per capita, mobile and internet penetration. We further found heterogeneity in the results across geographical regions and income groups. Following these findings, we suggest that financial inclusion policies could enhance population health.

Towards Achieving the Sustainable Development Goals (SDGs): The Impact of Debts on Income Inequality in Africa

The Agenda for Sustainable Development provides a framework for the creation of a better and sustainable future for all. The Sustainable Development Goals (SDGs) focus on addressing global challenges, including income inequality. Among others, the SDGs also commit countries to work towards reducing income inequality and as such, lowering income inequality is one of the key issues in Africa. However, given the high levels of debt on the continent, reducing income inequality could be a challenge. Majority of the literature examines the link between debts and economic growth with little attention paid to the impact of debts on income inequality. Moreover, not much is known on whether the relationship between debt and income inequality is non–linear. This study therefore contributes to the existing research efforts by investigating the threshold effects of debts using data from 24 African countries by relying on the sample splitting and threshold estimation approach. The results reveal that, while debts generally dampen income inequality, unbridled debt accumulation above the estimated thresholds does not decrease income inequality, indicating that the income inequality–reducing impact holds at lower levels of debt–to–GDP ratio. This evidence is insensitive to different indicators of income inequality and debts. Findings from this study show how increasing indebtedness contributes to widening income inequality in Africa.

Abolishing poverty in the Basque Country: two feasible basic income models

Basic income has garnered a great deal of attention in recent years. This surge in interest stems from growing income disparities, the failures of existing minimum income programmes, shifts in labour market dynamics and numerous global basic income pilot initiatives. Yet realising the successful implementation of a basic income requires a sustained and comprehensive effort. This research contributes to this imperative by presenting an unprecedented microsimulation analysis of the economic viability of introducing a basic income in the Basque Country. The study introduces two economically sustainable and coherent basic income models that not only effectively eliminate poverty but also generate redistributive effects. These outcomes would position the Basque Country as a region with lower income inequality than any European Union (EU) member state. This article underscores the transformative potential of basic income in the Basque Country and offers valuable insights for policy makers contemplating similar initiatives in other regions or nations.

Holding Back: The Impact of Motivation to Control Prejudice on Stereotypes About Immigrants

A central insight from the research building on the Stereotype Content Model (SMC) is that different groups elicit different emotional and threat reactions. To advance our knowledge about which groups are likely to share experiences of discrimination and prejudice, we must explore the content of the stereotypes connected to different immigrant groups. Building on population representative survey data, the study applies a split-sample experimental design to test the SCM in Norway, an egalitarian welfare state characterized by low-income inequality. The results confirm the relevance of the SCM model in an egalitarian welfare setting, displaying an ethnic hierarchy expressed through social stereotypes. The results further indicate that ambivalent stereotypes of immigrants are limited in the Norwegian context. Finally, this study extends the SCM model by examining how respondents’ motivation to control prejudice (MCP) moderate stereotype judgement and finds that respondents with a high MCP rated the groups that are stereotyped as cold and incompetent more positively than individuals with a low MCP. Thus, individual propensity to hold back on prejudices influences expressions of stereotype content.

Income inequality, current account, and financial risk: a mediation analysis for Asia

ABSTRACT This paper provides a mediation analysis for the effect of income inequality on the risk of financial crisis. We find that inequality affects risk mostly through current account imbalances, whether deficits or surpluses. The policy implication is that financial stability can be effectively strengthened under lower income inequality and healthier current accounts.

Economic growth and income inequality in sub-Saharan African countries: A test of Kuznets’ hypothesis

In this study, the influence of economic growth on income disparities in 29 sub-Saharan African (SSA) countries is investigated for the period 2005-2015. The primary objective of the study is to empirically test Kuznets? hypothesis, which holds that there is an inverted U-shaped relationship between economic growth and income inequality. The study examined this relationship using four proxies for income inequality: the composite inequality index, the Atkinson index, the Gini coefficient, and the Palma ratio. Using a modified version of a difference generalised method of moments (GMM) estimation technique, it was found that regardless of the proxy used to measure income inequality, there is a consistently significant negative relationship between income per capita (y) and income inequality in the countries under study. A consistent positive relationship was also found between the square of income per capita (y2) and income inequality across all the proxies used in the study. The study found that the relationship between economic growth and income inequality follows a U-curve. The result suggests that while economic growth initially lowers income inequality, inequality eventually rises in tandem with growth. This suggests that the bulk of the studied economies in the SSA region are situated on the downward portion of the U-curve. The policy implications are discussed.

An Overview of Financial Inclusion in Nepal

This article provides an overview of financial inclusion in Nepal, which refers to the availability of financial services and products to individuals and businesses, particularly those in disadvantaged and low-income regions. The research methodology employed in this study is descriptive research. The documents which were published by the government were analyzed. Nepal Rastra Bank (NRB) and the Ministry of Finance were primary sources of information. These reports contained valuable insights into financial inclusion, economic growth indicators, and program outcomes. Microfinance institutions have been instrumental in advancing financial inclusion in Nepal, offering financial services to low-income people and small enterprises that would not otherwise have access to the official banking system. There is a positive association between financial inclusion and economic growth in Nepal, as access to credit and the use of formal financial services have contributed to short- and long-term economic growth. Similarly, financial inclusion has a positive impact on the economy by increasing the savings rate, broadening credit availability, lowering income inequality, supporting financial stability, and encouraging the expansion of the digital economy. The government of Nepal has implemented various initiatives to encourage financial inclusion, including expanding credit availability, promoting financial stability, and encouraging the growth of the digital economy. Overall, financial inclusion is seen as a crucial component of economic progress and is expected to become even more important as Nepal continues to develop.

CAN FINTECH CURB INCOME INEQUALITY IN CHINA?

The effect of FinTech on income inequality in China and the characteristics of the existing thresholds are examined in this study based on China provincial panel data from 2011 to 2020 by combining dynamic panel differential GMM with panel threshold models. As revealed by this study, (1) FinTech can significantly curb income inequality. (2) FinTech can mitigate income inequality in all regions, and the degree of mitigation is more significant in the central and western regions of China. (3) The improvement of FinTech development can reduce income inequality in all quantiles. The regions with high-income inequality and low-income inequality are compared. The comparison results reveal that FinTech can reduce income inequality to a greater extent in regions with lowincome inequality. (4) FinTech can restrain income inequality under different threshold variables, and the restraining effect of economic growth is the most significant. The policy significance of this study is to fully exploit the empowerment and income-generating role played by FinTech, build a more inclusive financial system, create a good financial environment, cultivate residents’ financial knowledge level, enhance the ability of low-income groups to obtain income from financial services and reduce income inequality, to fulfill the development goal of common prosperity.

Immigrants and Inequality: Evidence from a Minor-Emerging Gateway Metropolitan Area in NC

abstract: Socioeconomic inequalities among foreign-born populations in the United States in minor-emerging gateways are rarely discussed in existing inequality literature. This study helps to fill that gap by examining inequality and spatial integration among immigrant, US–born White, and Black populations in a minor gateway metropolitan area of Greensboro–High Point, NC. The 2020 Census five-year (2016–2020) estimate of American Community Survey (ACS) housing and demographic data, the location quotient (LQ), Lorenz curve, and Gini Index are utilized. The LQ values suggest immigrant groups are more concentrated with Black populations than White populations, but US–born Black and White populations are far more segregated than immigrant groups. Lorenz curve and Gini coefficients confirm that White populations experience the least inequality while the greatest income inequality exists among US–born Black populations, followed by immigrant populations. Further, disparities in income are greater for immigrants living in their underrepresented communities than those who live in overrepresented neighborhoods. The study concludes that immigrant populations living in segregated neighborhoods with a higher proportion of racial and ethnic minorities have lower education and English language competency than those living in neighborhoods with a higher percentage of US–born residents, and hence have lower income inequality among populations.

Social and economic factors associated with child unintentional injury mortality in high-income countries

IntroductionRecognising the connection between country-level social determinants of health, and child unintentional injury mortality can contribute to better resource allocation for child safety. This cross-sectional country-level study aims to investigate...

For narrower income inequality: traditional finance or microfinance?

ABSTRACT This paper uses the theory of information imperfections to examine the relationship between income inequality and financial development in a dual financial system comprising traditional finance and microfinance. It uses panel data for 97 developing countries over a period characterized by declining income inequality from 2000 to 2017. Traditional finance is measured through domestic credit relative to GDP and the IMF Financial Development Index. Microfinance is measured through the size of microfinance gross loan portfolio relative to GDP and the number of active microfinance borrowers to the total population. Controlling for various measures of macroeconomic and socioeconomic variables and using different econometric specifications including a random-effects linear regression model with endogenous sample selection, the results show that microfinance consistently predicts a lower income inequality measured by the Gini coefficient, while traditional finance shows no impact. The findings of this paper draw clear policy implications regarding the role of microfinance as a tool for income equality in developing countries.