Mitigate Income Inequality Research Articles

The distributional impact of local banking. Evidence from the financial and sovereign-debt crises

This paper investigates whether local cooperative banks played a role in mitigating income inequality within Italian municipalities following the main crises that marked the European landscape from 2008 to 2015, namely the financial and sovereign-debt crises. Our empirical findings indicate that, despite the overall rise in income inequality during the post-crisis periods, municipalities hosting at least one cooperative bank branch experienced a comparatively smaller increase. This mitigating effect on income inequality is not observed in the case of non-cooperative banks. Furthermore, the size of the cooperative banking sector emerged as a significant factor in shaping income distribution: municipalities characterized by larger amounts of cooperative banks loans and deposits displayed lower levels of income inequality. The distributional impact of cooperative banks following the two crises was particularly pronounced in smaller municipalities, and where the degree of financial and industrial development was higher.

Does population aging coexist with income inequality in the long run? Evidence from selected Asia-Pacific countries

Advanced countries have experienced a general rise in income inequality, whereas the outlook for income inequality in developing countries is mixed. As such, reduction in income inequality continues to be an important socio-economic development goal in many countries in the twenty-first century. Furthermore, it remains unclear whether the slow progress in reducing income inequality is a manifestation of the prevailing aging population. Using a sample of countries that are currently considered aging, aged, and super-aged countries in the Asia-Pacific region, the paper empirically examines whether a long-run nexus exists between population aging and income inequality. The methodology adopted includes the augmented autoregressive distributed lag (A-ARDL) bounds test. The key results show that aging and income inequality have a long-run relationship among aged and super-aged countries. In contrast, recently graying countries show no evidence of cointegration due to their relatively early transition to aging. Some other control variables also reveal a significant impact on income inequality. Increases in the real gross domestic product per capita worsen the income distribution, but higher government expenditure can help moderate income inequality. In light of rapid population aging, the findings are useful for policy makers in designing and targeting appropriate socioeconomic policies to help mitigate income inequality in the long run based on the intensity of the share of the elderly population in the countries studied.

Non-linear links between human capital, educational inequality and income inequality, evidence from China.

This study aims to reveal short-run and long-run asymmetries among human capital, educational inequality, and income inequality in China over the period 1975-2020 using a nonlinear autoregressive distributed lag (NARDL) model. The estimated long-run asymmetry parameters reflect that positive shocks to secondary education (SSE) and higher education (HE) are negatively correlated with income Gini coefficient. The adverse shocks of secondary education (SSE) and higher education (HE) stimulate the Gini coefficient of income, but the effect of secondary education (SSE) on the Gini coefficient of income is not significant, while that of higher education (HE) is significant. The results also highlight that, in the long run, there is a significant asymptotic effect of the education Gini coefficient (educational inequality) and economic growth on the income Gini coefficient (income inequality). However, physical capital stock has a significant adverse effect on income inequality in the long run. Higher education significantly promotes educational inequality, while the square of higher education significantly reduces educational inequality, thus verifying the inverted U-shaped Kuznets curve hypothesis between higher education and educational inequality. Strategically, this study suggests higher education as a powerful tool for mitigating income inequality by emphasizing educational equity.

Current account imbalance and the inequality ratio of income to consumption: evidence from China and other Asian countries

This paper deals with global imbalances as an increasingly important issue in our age. While the literature establishes that current accounts are inversely related to the ratio of income to consumption inequality in OECD, our study finds that this relationship is reversed in Asia. That ratio has much to do with various schemes of consumption smoothing, which are affected by policy interventions to alleviate the effects of rising income inequality. Different policies may generate opposite outcomes. In OECD, policy encourages consumer credit and deficit spending among low-income people so that consumption inequality is kept artificially low, leading up to a current account deficit. In Asia, policy promotes output growth via high savings with no well-developed smoothing schemes designed to help poor households, so that consumption inequality moves in line with income inequality, with excess savings recycled into a current account surplus. Hence, any reduction in global imbalances requires both regions to adjust their policies for mitigating income inequality and optimizing smoothing schemes.

Taxation, democracy, and inequality in Sub‐Saharan Africa: Relevant linkages for sustainable development goals

AbstractGiven that the linear linkage between taxation and income inequality remains unclear, especially in Sub‐Saharan African countries, it is critical to explore how the redistribution channel of the tax system could mitigate income inequality within democratic institutions. Using the instrumental variable approach for robust analysis, this study explores the panel dataset of 42 Sub‐Saharan African countries from 1996–2014. The following findings are documented. First, both unconditional linkages between taxation and democracy overwhelmingly reduce income inequality. Second, harnessing democracy with taxation has a net effect that reduces income inequality. Overall, this study establishes that a strong democratic system strengthens the tax system for an income redistribution strategy to enhance income equality. This study is relevant for the achievement of Sustainable Development Goal (SGD) 1 on poverty reduction, SDG 10 on inequality, and SDG 16 on strong institutions.Related ArticlesGatchair, Sonia D. 2015. “Ideology and Interests in Tax Administration Reform in Jamaica.” Politics & Policy 43(6): 887–913. https://doi.org/10.1111/polp.12139.Nchofoung, Tii, Simplice Asongu, Vanessa Tchamyou, and Ofeh Edoh. 2022. “Gender, Political Inclusion, and Democracy in Africa: Some Empirical Evidence.” Politics & Policy 51(1): 137–55. https://doi.org/10.1111/polp.12505.Wang, Yingyao. 2017. “Why Tax Policy Is Not Politics in China: Public Finance and China's Changing State‐Society Relations.” Politics & Policy 45(2): 194–223. https://doi.org/10.1111/polp.12200.

The labor market outcomes of bilinguals in the United States: Accumulation and returns effects.

At least half of the world population is bilingual, but lifetime financial gains from early exposure to multiple languages are largely unknown. In this study, we analyze individual earnings of bilinguals in the US using 15 years of Census data and an augmented wage model, accounting for cognitive, manual, and interpersonal skills derived from O*NET job task descriptors via sparse principal component method. Using unconditional quantile regression, we find evidence that language skills mostly benefit individuals at the lower end of the earnings distribution. While our analysis does not establish causality, it underscores the potential of early language acquisition to mitigate income inequality by enhancing the employment prospects of low-income individuals. We also highlight the favorable cost-benefit ratio of language acquisition in childhood, when learners face no monetary opportunity costs and can achieve greater levels of fluency.

Spatial determinants of income inequality at the global level: The role of natural resources

Income inequality is a critical determinant of economic development, making it imperative to identify the factors that impact it positively or negatively through diverse methodologies. This study aims to investigate the spatial implications of natural resource rents, international trade, and democracy on income inequality in 78 countries across different regions from 1995 to 2017. A regional disaggregation was carried out, capturing spatial spills between neighboring countries. The study employed a spatial panel data econometric approach, integrating spatial lag (SAR), spatial error (SEM), Spatial Autoregressive Combined (SAC), and spatial Durbin (SDM) models. The findings provided empirical support for Heckscher and Ohlin's (1933) theory, indicating that regions with robust democratic systems effectively mitigate income inequality. Additionally, developed regions characterized by strong democracies demonstrated the capacity to enhance social welfare through the utilization of natural resource rents. Moreover, the study confirmed the presence of spatial dependence in income inequality across a majority of regions, with indirect effects manifesting as spillovers to neighboring countries. This research presents novel findings that contribute to understanding how income from natural resources affects income inequality, considering spatial effects. Likewise, this scientific article provides new ideas for the approach of new perspectives, focus, or theories on income inequality. An emphasis of economic policy might be on progressing toward a more exceptional level of transparency and fair democracy as well as on enhancing and diversifying the producing sectors. In order to reduce resource concentration, collaboration across nations would be crucial, taking geographical disparities into account.

Shared Prosperity and the Quintile Income in Sudan: Preliminary Findings

This paper attempted to tackle tow issues: the first issue is the income distribution top income quintiles (including some parcels) with bottom 20% and 40% ones. Secondly whether economic growth alone, could reduce extreme poverty and mitigate income inequality in Sudan? Different prosperity shared indicators applied to data obtained from two Labor Force Migration households’ Surveys collected by Ministry of Manpower for years 1996 and 2011. The findings of this study indicated that the income share of bottom 40% failed to catch up with shares of top 10%.and overall per capita .Accordingly, all the shared prosperity indicators results were associated with idea of polarization in the Sudan society, and more importantly CAGR (as one of indicators) empathized that the bottom 20% income have to grow by more than 60% annually in order to catch up with overall per capita growth during the period of the study. To improve the picture of the income distribution and to reverse the situation of poverty in Sudan, the pattern of economic growth has to be restructured and to be associated with high economic participation. The paper recommended a deliberate government intervention to improve income distribution.

Income Inequality In Relation To Universal Basic Income

This research paper examines the relationship between income inequality and the implementation of Universal Basic Income (UBI) programs. Using regression models and historical data, we investigate the potential impact of UBI on income distribution. UBI has the potential to mitigate income inequality, although the extent of its effectiveness varies depending on several factors. This paper discusses the advantages, historical context, and potential implications of UBI in addressing income inequality.

Bridging Africa’s income inequality gap: How relevant is China’s outward FDI to Africa?

• This study examines whether Africa’s institutional fabric propels Chinese FDI to reduce income inequality in Africa. • The focus is on 48 African countries for the period 1996–2020. • The empirical evidence is based on the dynamic Generalised Method of Moments. • Although Chinese FDI contributes to equitable income distribution in Africa, the effect is weak • Political stability, corruption control and voice and accountability are key for propelling Chinese FDI to reduce income inequality. This study examines whether: (i) the remarkable inflow of Chinese FDI to Africa matters for bridging the continent’s marked income inequality gap, (ii) Africa’s institutional fabric is effective in propelling Chinese FDI towards the equalisation of incomes in Africa and (iii) there exist relevant thresholds required for the various governance dynamics to cause Chinese FDI to equalise incomes in Africa. Our results, which are based on the dynamic GMM estimator and macrodata for 48 African countries, reveal the following. First, although Chinese FDI contributes to fairer income distribution in Africa, the effect is weak. Second, although Africa’s institutional fabric matters for propelling Chinese FDI towards the equalisation of incomes across the continent, governance mechanisms for ensuring political stability, low corruption, and voice and accountability are critical. Finally, the critical masses required for these three key governance dynamics to cause Chinese FDI and other income inequality-reducing modules to reduce income inequality are 0.8, 0.5 and 0.1, respectively. These critical masses are thresholds at which governance is necessary but no longer sufficient to complement Chinese FDI to mitigate income inequality. Hence, at the attendant thresholds, complementary policies are worthwhile. Policy recommendations are provided in the conclusion.

Determinants of market margins among okra traders

In the tropics, okra is an important vegetable crop and its production is a viable livelihood activity; however, several factors affect its marketing and margins derivable thereof. Therefore, this study analyzed the determinants of market margins among okra traders in Owerri, Imo State, Nigeria. Primary data collected via multistage sampling were analyzed using descriptive statistics, market performance and regression analysis. The results revealed that the estimated market margin and market efficiency index were ₦1900/bag (100kg) and 0.35, respectively. Channel 4 (27%) had the highest percentage of commodity sales volume. The coefficient of multiple determination (R2) was 0.826; hence, 83% variation in the market margin was accounted for by variables in the regression model. Moreover, coefficients of the variables including age (0.873), education (0.696), market experience (0.571), cost price (–0.598), quantity sold (0.576), marketing cost (–0.72) and income level (0.98) were significant determinants of okra market margins. They identified constraints affecting okra marketing in the study area. This study recommends the provision of incentives, policy adoption to mitigate income inequality and improve market performance; regulation of commodity prices, agent exploitation and marketing costs; adoption of modern communication tools and technologies, market channel diversification; provision of market infrastructures and interventions.

Identification of Agriculture, Forestry, and Fisheries Sectors in Mitigating Income Inequality in the Former Residencies of Madiun

Development is a long-term process of change to improve regional welfare. The regional economic development indicator is GRDP. The former Madiun residencies have the lowest average of GRDP. Accordingly, the economic development activities and effort to mitigate income inequality should be carried out properly. Using MRT, Williamson Index, and Shift Share analysis, the research results on agricultural, forestry and fisheries sectors of the former Madiun residencies include the basic and non-basic sectors. The basic-sector former residencies of Madiun include the regencies of Pacitan, Ponorogo, Madiun, Magetan, and Ngawi. Meanwhile, the non-basic sector ex-residence is the City of Madiun. The results of the Williamson Index show that the agricultural sector has a role in reducing income inequality. The IW value of ex-residencies with the agricultural sector has an average of 0.39, and the one without the agricultural sector is 0.53. As for the shift-share, the results show that the national share component of all sub-sectors is positive, meaning that sub-sector is experiencing growth. The industrial mix of all sub-sectors is negative (IM<0), meaning that sub-sector growth in former Madiun residencies is slow. The competitive share has positive value (CS>0), meaning that it has good sub-sector competitiveness and can develop.

Post-Retirement Paid Work and Inequalities at Older Ages

Participation in paid work frequently extends beyond pensionable age, with the Organization for Economic Cooperation and Development observing, in “Pensions at a Glance” (2017, pp. 126–7), that effective retirement ages in high-income countries exceed normal full-pension-eligibility ages by 10 months for men and two months for women. While working after pensionable age is becoming ever more common, not all workers on the cusp of retirement are able to continue in their current position or find a new job. Remarkably, little is known about the implications of unequal access to post-retirement work for social and income inequalities in later life, nor how job quality might change as people work into the years normally set aside for retirement. The four papers in this symposium address the following questions: 1) do bridge employment transitions exacerbate or mitigate income inequality later in life? 2) how does job quality (job satisfaction, physical and psychosocial working conditions) compare before and after pensionable age? 3) which processes lead to changes in working conditions in the late career? and 4) might empirical and theoretical gains be made by considering post-pensionable-age paid work as a specific career stage? The presenters use longitudinal data from the United States (the Health and Retirement Study, HRS), Sweden (Swedish Longitudinal Occupational Survey of Health, SLOSH), and Japan (Japanese Study of Aging and Retirement, JSTAR) complemented by interviews with older workers in Sweden. This symposium will provide insights into the nature and consequences of working after pensionable age in contrasting institutional settings.

Income Inequalities in Capitalistic and Socialistic Economies: “An empirical evidence from capitalistic and socialistic countries

Income inequality undesirably affects the living standards of the people in the different parts of the world. The main objective of the paper is to find out the intensity of income inequality in capitalistic and socialistic economies in the world. The study helps to explore the empirical evidence that how income inequality impacts the life of the people under the umbrella of concurrent economic systems. The study is based on the panel data set. The Generalized Method of Movements (GMM) is applied and the results depict that Government revenues are inversely associated with income inequality in both economic systems. It happens because government expenditures in an account of social safety nets result in a decline in income inequality. On the other side, economic growth, and employment ratio hold a positive connection with income inequality under the parasol of socialism and capitalism. This research reveals that both systems are deficient to mitigate income inequality and leave the space for a new and balanced economic system.

The Macroeconomic Effects of Financialization and the Wage Gap between Blue and White Collar Workers

In a post-Keynesian growth model with two types of workers, an attempt is taken to understand changes in financial behaviour and income distribution and their macroeconomic causes and consequences. For a relatively strong speed of adjustment in the financial market and a relatively weak reserve army effect, a stable steady state is achieved in the wage-led demand regime. An endogenous and perpetual business cycles may emerge in both the regimes. While in some scenario, a contraction in the wage gap between white and blue-collar employments can make the steady state unstable, in a profit-led demand regime, a rise in the wage gap can destabilize the economy. A more regulated financial market is desirable for ensuring the economy’s stability in a weak wage-led or a weak profit-led demand regime. A more regulated labour market and a rise in unionization are desirable as these can mitigate income inequality.

Does Globalization Mitigate Income Inequality?

Does Globalization Mitigate Income Inequality?

Does Globalization Mitigate Income Inequality

Bechtel (2012) showed that economic anxiety accompanying loss of household income and purchasing power has harmful effects on consumer demand, voter turnout, institutional trust, societal satisfaction, and well being. This sequel shows that economic anxiety is driven by income inequality, which mimics the detrimental effects of economic anxiety. The strongest shock of income inequality is its incitement of societal dissatisfaction. It is demonstrated that globalization reduces income inequality, alleviating economic anxiety and its negative impacts. These effects were found in a large cross-national sample from the fifth round of the European Social Survey. They demonstrate the value of using survey responses as micro outcomes for assessing macro-economic phenomena.

NOT ALL BANKS ARE EQUAL: COOPERATIVE BANKING AND INCOME INEQUALITY

This paper studies the role of different types of credit institutions in income inequality. By analyzing Italian local (provincial) credit markets over the 2001–2011 period, we find that cooperative banks mitigate income inequality in local communities more than their commercial counterparts. The results also suggest that it is the specific nature and orientation of cooperative banks, more than their relationship lending technologies, that improve income distribution. The impact of cooperative banking on inequality appears however to be partly channeled by a reduced dynamism of local economies, especially lower migratory flows and business turnover. (JEL G21, G38, O15)

Closing the Gap: Tax Policy Solutions to Top-End Income Inequality in a Globalized Canadian Economy

Rising income inequality is a pressing political issue in Canada and internationally. Since the 1980s, the evolution of the global economy and shifting tax policy frameworks have generated a steep rise in inequality characterized by runaway incomes at the very top of the spectrum and a growing role played by capital income. Given that tax policy is one of the primary tools available for governments to structure income distribution, reform is needed. However, tax policy solutions to rising inequality must address the uncertainty surrounding the ability of governments to take effective action in a globalized world economy. This policy brief puts forward viable reforms. The Canadian federal government can mitigate income inequality domestically through targeted corporate and personal income tax reforms and a strengthened enforcement regime.

Inflation and income inequality in a variety-expansion growth model with menu costs

This study explores the effect of inflation on income inequality in a growth model with variety expansion and menu costs. Inflation is found to determine income inequality via both asset-value and interest-rates effects. Our numerical analyses show that higher inflation turns these effects negative, stifling economic growth and mitigating income inequality.