Reduce Income Inequality Research Articles

Public Spending and Inclusive Growth in Developing Asia

This paper examines the impact of government spending on inclusive growth in developing Asia, focusing on fiscal redistribution through education, health, and social benefits. Using panel data from 16 countries over the period 1970–2017, we apply a fixed-effects logistic regression model to assess the likelihood of inclusive growth episodes. Our findings indicate that fiscal redistribution, particularly through targeted health and education spending, significantly enhances the chances of achieving inclusive growth. The results also suggest that redistributive spending helps reduce income inequality, ensuring that the benefits of economic growth are more widely shared. We further explore the practical implications of these findings through case studies of China, India, and Vietnam, demonstrating how effective government spending can foster inclusive growth. The paper highlights the importance of well-targeted fiscal policies to support sustainable and equitable development in the post-COVID recovery.

ICT and energy consumption in Sub-Saharan Africa: Effects and transmission channels

This paper contributes to the literature on the relationship between information and communication technologies (ICTs) and energy consumption. Despite increasing attention on the subject, existing studies have not yet investigated the channels through which ICTs affect energy demand. We use a stochastic impact model extended to the population, wealth and technology regression model to estimate both the effect and transmission of ICTs on energy demand in 24 sub-Saharan African countries from 1995 to 2018. Empirical results show that ICT use, measured by mobile and fixed-line telephone penetration significantly reduces energy consumption. In addition, the mediation analysis reveals that ICTs not only have a direct negative effect on energy consumption but also an indirect negative effect through its impact on GDP per capita and industrial sector development and a mixed indirect effect through financial development. However, the total effect is negative and indicates that ICTs are reducing energy consumption in sub-Saharan Africa. To accentuate the negative effects of ICTs on energy consumption, Governments should design policies to improve access to credit for the private sector, reduce income inequalities among populations, promote the use of industrial development and provide financial incentives for the development of green technologies.

On the issue of impact of income inequality on the socio-economic development of territories

The issues of economic inequality and justice were considered in the works of the philosophers of Ancient Greece. Over time, the problem of income inequality has not lost its relevance, which is confirmed by domestic and foreign studies. Until 2015, the capital of the Russian Federation had the highest value of the Gini index, which indicates a high degree of inequality in income distribution in the territory of this subject. Over time, the situation has changed, in particular, by increasing the incomes of the least well-off groups of the population, providing them with subsidies and payments. The purpose of the study is to analyse to what extent these changes have an impact on the socio-economic development of the region. With the help of econometric calculations, the degree of dependence between the equity index and the value of the gross regional product per capita has been determined. It is revealed that there is an inverse relationship between the considered indicators, that is, a reduction in income inequality has an impact on the growth of regional production. The high value of the coefficient of determination indicates the high quality of the constructed model. The possibility of using the simulation results in practice is confirmed by calculations of the average approximation error and the Fisher criterion.

Digital Economy, Employment Structure and Labor Share

The COVID-19 pandemic significantly disrupted employment, making it challenging to increase the labor share. However, the recent expansion of the digital economy has revitalized economic growth and markedly improved productivity. This raises a critical question: can the growth of the digital economy not only boost labor productivity but also increase labor share and reduce income inequality? This paper explores the impact of digital economic development on labor share, examining the underlying mechanisms at play. Our findings suggest that the digital economy has the potential to reshape employment structures, leading to an increase in the labor share. However, the extent of this impact varies across different industries. Furthermore, from an industrial chain perspective, the digital economy has created technology spillover effects that benefit upstream and downstream sectors. In light of these findings, it is crucial to continue fostering the growth of the digital economy to address potential negative impacts on the labor share in the future.

When education is positional: higher education expansion, welfare regimes and income inequality

Abstract Rectifying the imbalance of theorisation of education expansion focusing on its benefits, this study examines the relationship between education expansion and income inequality by turning our attention to its risky aspects. We investigate how expanding education might not effectively mitigate income inequality, because it brings about costly and risky competition for the positional value of education. We consider welfare regimes as relevant institutional factors associated with educational positionality based on the similarities between two environmental conditions that make education positional and two underlying dimensions of welfare regimes (de-stratification and commodification). We analysed higher education cases in twenty-four to twenty-five developed countries from 2000 to 2020. Our results show that higher education expansion initially reduced income inequality, but the reducing effect was attenuated, and eventually, it increased income inequality when higher education was positional, corresponding to the countries with a liberal regime and two East Asian countries such as Japan and Korea.

Associations of objective and subjective relative deprivation with health, happiness, and life satisfaction

BackgroundRelative deprivation is a critical mechanism for understanding how income inequality affects mental health. However, few studies have compared the effects of objective and subjective relative deprivation on health outcomes. This study compared how objective and subjective relative deprivation and their interaction relate to human flourishing measures, including health, happiness, life satisfaction, social relationships, and financial stability. MethodsThis cross-sectional study analyzed data from 1,592 adults in Taiwan. The objective and subjective relative deprivation were measured using the Yitzhaki Index and the Personal Relative Deprivation Scale-Revised (PRDS-R), respectively. We conducted least-squares regression models to investigate the associations between these relative deprivation measures and human flourishing outcomes. ResultsThe correlation between the Yitzhaki Index and PRDS-R was 0.16 (p < 0.001). After controlling for absolute income and covariates, the regression models showed that objective and subjective relative deprivation was negatively associated with all six human flourishing outcomes. Notably, subjective relative deprivation is strongly associated with outcomes than objective relative deprivation. Also, the Yitzhaki Index remained adversely associated with all human flourishing outcomes after accounting for the PRDS-R. Furthermore, the interaction between the Yitzhaki Index and PRDS-R was associated with additional risks to well-being, particularly affecting health, happiness, life satisfaction, and financial stability. ConclusionBoth objective and subjective relative deprivation were negatively associated with multiple dimensions of human flourishing. Policies aimed at addressing relative deprivation and reducing income inequality could contribute to higher levels of health, happiness, life satisfaction, social relationships, and economic stability.

The interaction of income inequality and energy poverty on global carbon emissions: A dynamic panel data approach

Income inequality and energy poverty are critical obstacles to the worldwide low-carbon transformation and deeply affect human behavior. Applying a dynamic panel data model, this study investigates the effect of income inequality and energy poverty on global carbon emissions. We determine the effect of the interaction between income inequality and energy poverty on the global low-carbon transformation based on a panel data set of 193 countries from 1990 to 2019. A one standard deviation decrease in the Gini coefficient causes a 2.98 % decrease in carbon emissions per capita, with the median value of energy poverty. However, in poor countries where the proportion of population with access to electricity is less than 86.0 %, reducing income inequality will increase carbon emissions. The role of energy poverty on carbon emissions per capita is also affected by income inequality. When the Gini coefficient is lower than 0.461, increasing access to electricity will reduce carbon emissions. In contrast, when the Gini coefficient is higher than the critical value of 0.461, increased access to electricity will raise carbon emissions. These findings indicate a new strategy for advancing low-carbon transformation based on the interrelationship between income equality and energy poverty eradication.

Analysis of Zakat as an Alternative Fiscal Instrument in Supporting Economic Development in Indonesia

This study explores the potential of zakat as an alternative fiscal instrument in supporting economic development in Indonesia. Zakat, a mandatory charitable contribution in Islam, has the ability to address poverty, reduce income inequality, and contribute to economic growth. Using a quantitative approach, data were collected from 80 respondents, including zakat payers, recipients, and administrators, through a Likert-scale survey. The data were analyzed using SPSS version 26 to evaluate the impact of zakat distribution efficiency and utilization on poverty reduction and economic development. The results demonstrate that both zakat distribution efficiency and utilization significantly contribute to poverty reduction and economic development, supporting the hypothesis that zakat can play a crucial role as a fiscal tool. The study's findings suggest that improving zakat management practices and aligning zakat utilization with long-term development goals could enhance its impact on Indonesia's economic growth.

Analyzing the Dynamics of Inflation, Exchange Rates and Economic Growth through the Gini Index: Modeling VAR in Morocco

In this study, we analyze the cross-impact of inflation, exchange rates and economic growth on income inequality in Morocco between 2000 and 2022, based on the GINI index as a measure of inequality. Its main objective is to understand how these macroeconomic variables influence income disparities. Our methodology is based on a VAR model to capture dynamic interactions between variables. To validate the robustness of the model, Granger causality tests and specification tests, including tests of homoscedasticity and autocorrelation of residuals, were used. The result is that inflation has a significant positive impact on income inequality, and exchange rate fluctuations directly influence inequality. Furthermore, economic growth helps to reduce inequality, although this effect depends on the distribution of the benefits of this growth. This study contributes to the existing literature by providing empirical evidence of the importance of macroeconomic stability and educational and fiscal policies in reducing income inequality.

Inequality of Labor Income in Kazakhstan’s Regions: Trends, Causes and Opportunities for Reduction

In the modern world, income inequality is growing, the share of labor income is decreasing, and the problems of overcoming poverty and equalizing people’s living standards have become acute. The article aimed to study trends in regional and sectoral inequality of labor income in Kazakhstan, identify contradictions and causes of their differentiation, and develop recommendations for reduction. The hypothesis: the assumption that the size of regional inequality of labor income depends on the sectoral specialization of the regional economy. Tasks: review theoretical issues of income inequality, analyze wage trends in Kazakhstan’s regions and their primary industries, and develop recommendations to reduce income inequality. The proof/refutation of the hypothesis was carried out by assessing regional and sectoral differences in the labor incomes of Kazakhstanis and identifying their contradictions. The methods are generalization and concretization, comparisons and analogs, systematic approach, economic and statistical, comparative analysis, Pareto, and indicative. Information base: domestic and foreign scientists’ works, data from the Bureau of National Statistics of the Republic of Kazakhstan, and regional statistical services. Results: the methods of overcoming income inequality in world practice were identified; it was proved that despite wage growth, the share of labor income is decreasing; regional wage inequality in Kazakhstan in 2022 amounted to 2.3 times. It is recommended that regional inequality of labor income be reduced by introducing regional coefficients and shifting taxation from labor income to income from capital and property.

BRIDGING THE DIGITAL GAP: ANALYSING THE IMPACT OF ICT DIFFUSION ON INCOME INEQUALITY IN INDONESIA

The development of information and communication technology (ICT) has significantly transformed the socio-economic structure of society, particularly in terms of income distribution. This study aims to analyse the impact of ICT development on income inequality across 34 provinces in Indonesia from 2012 to 2020, employing econometric methods based on panel data through a fixed effects model. Empirical findings reveal that ICT readiness and ICT skills tend to exacerbate income inequality, while ICT use and its quadratic form contribute to reducing it. These results suggest that although ICT infrastructure and skills are crucial, their uneven distribution and utilisation can widen income disparities. Consequently, this study highlights the importance of ensuring equitable access to ICT across Indonesia to mitigate economic inequality. The study's recommendations stress the pivotal role of the government in expanding ICT infrastructure, fostering a research and innovation climate conducive to digital transformation, and formulating policies that enhance ICT skills nationwide. These measures would improve digital literacy, upgrade workforce capabilities, and promote inclusive digital economic growth. Ultimately, comprehensive and equitable ICT development can play a critical role in reducing income inequality across Indonesia.

Promoting Sustainability: Land Transfer and Income Inequality Among Farm Households

The United Nations Sustainable Development Goals emphasize the dangers of inequality and initiatives on how to reduce it. Income inequality is an important part of this and can cause many social problems. This study aims to investigate the impact of land transfer on income inequality of Chinese farm households and its mechanism of action. This study empirically analyzes the impact of land transfer on farm household income inequality based on the OLS model using 27,134 samples from the 2018–2020 China Family Panel Study (CFPS) data. The study finds that land transfer can effectively reduce income inequality among farm households. However, only land transfers out affect income inequality; the effect of land transfers in is not significant. At the same time, there is some heterogeneity in the impact of land transfers on farm household income inequality. The effect is greater in the east and west than in the center. The effect is greater in the north than in the south. The role is greater in food-producing areas than in non-food-producing areas. Mechanism testing shows that land transfer impacts income inequality among farm households by promoting entrepreneurship. Farm households who use the Internet and have stronger social capital gain more from the impact of land transfer on income inequality.

Energy Poverty and Environmental Quality Nexus: Empirical Evidence from Selected South Asian Countries

South Asian countries are included in the economies of developing Asia. The region of South Asia is predominantly affected by energy poverty issues due to a heavy reliance on conventional energy and unpredictable access to energy services. It has about a quarter of the world's population and is home to three of the world's ten most populated countries: India, Pakistan, and Bangladesh. This study investigates environmental sustainability dynamics in South Asian countries from 2000 to 2021, utilizing the Cross-sectional Autoregressive Distributed Lag (CS-ARDL) and Dumitrescu-Hurlin (D-H) causality methods. The research offers insights into the long-term trends and causal relationships that shape environmental outcomes in South Asian nations. Based on empirical findings, in the long-term, it is revealed that increases in energy poverty, economic growth, income inequality, and capital formation raise greenhouse gas (GHG) emissions, while renewable energy and labor reduce GHG emissions. On the other hand, the error correction term shows the speed of adjustment toward equilibrium at 0.75%. Furthermore, the D-H panel causality reveals a directional link between variables. These findings highlight the urgent need for South Asian countries to implement policies to address energy poverty, promote renewable energy adoption, and reduce income inequality to mitigate GHG emissions and achieve long-term environmental sustainability effectively.

The Impact of Financial Inclusion on Household Incomes in China: An Empirical Study

Financial inclusion is considered one of the important determinants for improving the incomes of households. This research analysis is to estimate the impact of financial inclusion on household incomes in China. The data was obtained from China Household Financial Survey (CHFS) for the year 2017. This paper measures financial inclusion through its four dimensions, namely formal account, formal saving, formal credit, and formal insurance, based on the definition of financial inclusion by the World Bank, 2017. Three different econometric techniques, namely Ordinary Least Squares, Quantile Regressions, and Instrumental variable methods, are used to empirically test the influence of inclusive finance on income in China. The instrumental-variable method was used to cope with the problem of endogeneity. The results of this research showed a significant relationship between households’ incomes and formal accounts, formal savings, formal credit, and formal insurance in China. This study found that the main driver of household income is financial inclusion, as these two are positively correlated. The main determinants of financial inclusion are significant variables for households’ incomes in China. Thus, this study concluded that financial inclusion helps to reduce income inequality. Hence, this research work recommended that policymakers in China should devise such policies to further improve the status of financial inclusion, ensuring a reduction in income inequalities.

Income inequality: The effects of public education expenditure and information and communications technology in sub-Saharan Africa

Background: As nations globally strive to meet the United Nations Sustainable Development Goal (SDG) 10, which underscores the reduction of inequality, there is an increasing need to harness the power of education and information and communications technology (ICT) to achieve this aim. Therefore, this study is motivated by this rationale.Aim: The synergistic effect of government spending on education and ICT on income inequality in sub-Saharan Africa (SSA) in the long run.Setting: Panel data for 30 SSA countries from 1990 to 2022 are used.Method: This research used the Fully Modified Ordinary Least Square (FMOLS) technique, which provides long-run estimates, to achieve the aim of the article.Results: The FMOLS results reveal that public education expenditure increases income inequality while its squared expenditure reduces it in the long run. However, over time, ICT diminishes inequality. Notably, the combined effect of public education spending and ICT strengthens the effect of public education expenditure on income inequality in SSA in the long term.Conclusion: In summary, with the incorporation of additional control variables in the analyses, it suggests that SSA’s governments, along with policymakers, have the opportunity to achieve income inequality reduction by strategically making use of public education spending and ICT.Contribution: This article adds significant value to the literature by demonstrating the effect of public education spending and ICT on income inequality in SSA (characterised by higher level of income inequality). To mitigate concerns regarding endogeneity, this article uses FMOLS.

Unraveling the global economic and mortality effects of rising urban heat island intensity

The increasing severity of urban heat island (UHI) effects poses a significant concern in cities, where to over half of the world's population lives. We examine the pattern of surface UHI intensity (SUHII) and its effect on urban economic productivity and mortality across 171 countries from 2003 to 2018. Countries with heavy industrial/manufacturing bases and higher income levels face more significant economic repercussions from SUHII. Males experience higher mortality rates under comparable SUHII conditions. A unit increase in GNI correlates to a 23.2 % rise in SUHII's effect on GDP and a 5.5 % increase in its effect on mortality rate. A higher Socio-Demographic Index mitigates SUHII's impact on urban GDP. Moreover, the Gini index directly impacts SUHII more than it affects SUHII-related mortality through inequality. Reducing income inequality by one unit will increase the enhancing effect of SUHII on the mortality rate by 11.8 %. Our findings reveal a significant link between wealth disparity and amplified health risks associated with SUHII, potentially leading to new forms of urban inequality. The study highlights the importance of development status and economic composition in facing UHI-related challenges and recommends equitable strategies for policymakers and urban planners to mitigate UHI effects in diverse developmental contexts.

A Policy Proposal to Strengthen the Income Redistribution Function of the National Pension Scheme in South Korea: An Analysis of South Korea’s 5th National Pension Comprehensive Plan (Draft)

In this study, we elucidate the income redistribution effects of the proposal to incorporate the Bend Points mechanism of the U.S. OASDI into the Korean National Pension Scheme (BP-KNPS Proposal) through a micro-simulation analysis using individual data from the Korean Labor and Income Panel Study (KLIPS). In addition to examining the effects of introducing the BP-KNPS Proposal into the current National Pension Scheme (NPS), we also consider the impact of this scheme being combined with the 5th National Pension Comprehensive Plan (Draft), announced by Korea’s Ministry of Health and Welfare on 30 October 2023. When the BP-KNPS Proposal is introduced into the current NPS, the Mean Log Deviation (MLD) of the net transfer amount (lifetime pension benefits minus lifetime pension contributions) for regular employees decreases from 0.2022863 to 0.1929960. Similarly, the MLD for self-employed and irregular workers decreases from 0.2046127 to 0.1721433, indicating a reduction in income inequality. Furthermore, when the BP-KNPS Proposal is combined with the 5th National Pension Comprehensive Plan (Draft), the effects are mixed. The proposals to increase the pension contribution rate and adjust the rate increase speed via generation lead to a reduction in income inequality compared to the current NPS when combined with the BP-KNPS Proposal. However, the proposals to raise the pensionable age result in increased income inequality, similar to the outcomes under the current system. This finding suggests that the triple burden identified by literature review—the reduction in benefits due to disparities in contribution periods and life expectancy, and the raised pensionable age—has a greater impact on low-income participants than the inequality-reducing effects of the BP-KNPS Proposal.

Impact of e-commerce on income inequality: evidence from rural China based on cross-county panel data

ABSTRACT Although information and communications technologies (ICTs) are developing rapidly worldwide, evidence of the relationship between e-commerce and regional income inequality in the rural areas of a developing country remains scarce. Using original cross-county panel data, this study investigates the impact of e-commerce on regional income inequality in rural China, taking into consideration endogeneity issues. The results indicate that e-commerce may increase income inequality in developed counties but reduce income inequality in the less-developed counties; however, the total effect of e-commerce on overall income inequality is insignificant. The decomposition results show that differences in e-commerce accessibility contribute to widening the income inequality between developed and less-developed counties. In contrast, the differences in the income returns of e-commerce usage contribute to reducing income inequality. The empirical results suggest that a policy promoting e-commerce development may reduce income inequality in less-developed regions.

Under Treasury Control: Japan’s Emergence as an Egalitarian, Small-government State

This study analyses the formation of a policy system that reduced income inequality in Japan in the 1960s, a period of rapid economic growth. According to comparative research, the Japanese state is an example of small government with income equality. Japan’s income inequality rose in the 1950s, and at that point, the government faced a decision about how to reduce income inequality, and particularly whether to expand social security and government size. This study uses primary materials to analyse how and why Japan became more egalitarian while maintaining a small-government state, focusing on fiscal rules set by the Ministry of Finance, which adopted a balanced budget rule that prevented the issuance of public bonds and limited the tax burden ratio. As reflected in the government’s Income Doubling Plan, this development led to a trade-off among factors, such as social security, public works, and tax cuts, which led to the subordination of social security. Despite public debt issuance in 1965, which was contrary to two fiscal rules, social security did not expand because of fiscal rigidification. Throughout the 1960s, spending on public works and income tax cuts was prioritised over social security, resulting in small government but also income equality.

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.