Rise In Inequality Research Articles

Competition Law and Economic Inequality: A Comparative Analysis of the US Model of Law

ABSTRACT To what extent does the choice of competition law model correlate with economic inequality? While competition laws have been suggested as potentially contributing to current inequality trends in developed countries and as a viable instrument to address them, there is little empirical evidence on their distributional effects. This article helps fill this gap. It utilizes a comparative legal approach and a unique estimation framework based on the textual similarity to estimate the differences between the US and EU models and provides evidence that countries that adopt a US-style antitrust model are more likely to exhibit higher income inequality levels over time. While this link should not be interpreted causally, it suggests that potential institutional factors might affect the rise of inequality.

ANTITRUST AND INEQUALITY

ANTITRUST AND INEQUALITY

Global Inequality in the Current Era

One of the most vehement criticisms to the current global era refers to the issue of huge income disparities within and between countries. At present, global inequality is higher than it was 200 years ago but, at the same time, up to COVID 19, the Gini index marks the first time since the Industrial Revolution that it stopped rising. This downward trajectory has been driven by a decline in between-country inequality —the main explanatory factor for global income disparities— partially offset by a rise in within-country inequality. The downward trend between countries should not be unexpected, since low-income countries in Asia, particularly China, have experienced growth rates substantially above the world average in the context of a rapid industrialization process. The pandemic has revealed and worsened preexisting inequalities in both within and between countries, so that global inequality also appears to have increased since its outbreak.

On the Character and Causes of Inequality in Latin America

On the Character and Causes of Inequality in Latin America

Surveillance Capitalism or Democracy? The Death Match of Institutional Orders and the Politics of Knowledge in Our Information Civilization

Surveillance capitalism is what happened when US democracy stood down. Two decades later, it fails any reasonable test of responsible global stewardship of digital information and communications. The abdication of the world’s information spaces to surveillance capitalism has become the meta-crisis of every republic because it obstructs solutions to all other crises. The surveillance capitalist giants–Google, Apple, Facebook, Amazon, Microsoft, and their ecosystems–now constitute a sweeping political-economic institutional order that exerts oligopolistic control over most digital information and communication spaces, systems, and processes. The commodification of human behavior operationalized in the secret massive-scale extraction of human-generated data is the foundation of surveillance capitalism’s two-decade arc of institutional development. However, when revenue derives from commodification of the human, the classic economic equation is scrambled. Imperative economic operations entail accretions of governance functions and impose substantial social harms. Concentration of economic power produces collateral concentrations of governance and social powers. Oligopoly in the economic realm shades into oligarchy in the societal realm. Society’s ability to respond to these developments is thwarted by category errors. Governance incursions and social harms such as control over AI or rampant disinformation are too frequently seen as distinct crises and siloed, each with its own specialists and prescriptions, rather than understood as organic effects of causal economic operations. In contrast, this paper explores surveillance capitalism as a unified field of institutional development. Its four already visible stages of development are examined through a two-decade lens on expanding economic operations and their societal effects, including extraction and the wholesale destruction of privacy, the consequences of blindness-by-design in human-to-human communications, the rise of AI dominance and epistemic inequality, novel achievements in remote behavioral actuation such as the Trump 2016 campaign, and Apple-Google’s leverage of digital infrastructure control to subjugate democratic governments desperate to fight a pandemic. Structurally, each stage creates the conditions and constructs the scaffolding for the next, and each builds on what went before. Substantively, each stage is characterized by three vectors of accomplishment: novel economic operations, governance carve-outs, and fresh social harms. These three dimensions weave together across time in a unified architecture of institutional development. Later-stage harms are revealed as effects of the foundational-stage economic operations required for commodification of the human. Surveillance capitalism’s development is understood in the context of a larger contest with the democratic order—the only competing institutional order that poses an existential threat. The democratic order retains the legitimate authority to contradict, interrupt, and abolish surveillance capitalism’s foundational operations. Its unique advantages include the ability to inspire action and the necessary power to make, impose, and enforce the rule of law. While the liberal democracies have begun to engage with the challenges of regulating today’s privately owned information spaces, I argue that regulation of institutionalized processes that are innately catastrophic for democratic societies cannot produce desired outcomes. The unified field perspective suggests that effective democratic contradiction aimed at eliminating later-stage harms, such as “disinformation,” depends upon the abolition and reinvention of the early-stage economic operations that operationalize the commodification of the human, the source from which such harms originate. The clash of institutional orders is a death match over the politics of knowledge in the digital century. Surveillance capitalism’s antidemocratic economic imperatives produce a zero-sum dynamic in which the deepening order of surveillance capitalism propagates democratic disorder and deinstitutionalization. Without new public institutions, charters of rights, and legal frameworks purpose-built for a democratic digital century, citizens march naked, easy prey for all who steal and hunt with human data. Only one of these contesting orders will emerge with the authority and power to rule, while the other will drift into deinstitutionalization, its functions absorbed by the victor. Will these contradictions ultimately defeat surveillance capitalism, or will democracy suffer the greater injury? It is possible to have surveillance capitalism, and it is possible to have a democracy. It is not possible to have both.

Trade, Labor Reallocation Across Firms and Wage Inequality

This paper develops a framework for studying the effects of higher trade openness on the wage distribution that emphasizes within-industry labor reallocation across firms, strong skill-productivity complementarities in production and heterogenous fixed export costs across firms. Assuming no entry in the industry, an autarkic economy that opens to trade experiences a pervasive rise in wage inequality; a trade liberalization in a trading economy increases inequality at the lower end of the distribution, but may reduce it elsewhere. Assuming free entry, opening to trade could result in pervasively higher inequality or wage polarization. The analysis highlights the importance of new exporters (extensive margin) in shaping the aggregate relative demand for skills, a channel controlled by the distribution of fixed export costs in the model.

The effects of competition law on inequality—an incidental by-product or a path for societal change?

ABSTRACT Rising economic inequality presents society with unprecedented challenges. Direct instruments designed to address these worrying trends have often under performed. As a result, we find ourselves on a potentially dangerous and downward path. In this article we explore whether, in parallel to other efforts to mitigate the rise of inequality, there can be a role for competition law in the quest to reduce the widening inequality gap. We begin by outlining the possible relationship between competition law enforcement, market power, and economic inequality. We supplement the theoretical discussion with a review of empirical analysis of these linkages. We look at macro and micro data and emphasize the role of labour compensation as a key mechanism which links competition law enforcement, competition dynamics, and economic inequality. We then reflect on the policy implications and possible means to utilize competition enforcement in a manner that could reduce economic inequality.

Earnings inequality and working hours mismatch

Based on data from the German Socio-Economic Panel, we document a significant rise in monthly earnings inequality between 1993 and 2018. The main contributors are inter-temporal increases in working hours inequality and increases in the covariance between working hours and hourly wages, while changes in the distribution of hourly wages play a minor role. Applying a novel double decomposition technique reveals that these results are particularly pronounced in the growing groups of female employees and service sector employees. If employees had been able to realize their desired optimal working hours, the increase in inequality would have been more moderate. This is mainly due to the fact that employees with low hourly wages work less than desired, a finding that is reinforced over time—even after controlling for various covariates.

Macroeconomic Effects of Capital Tax Rate Changes

We study aggregate, distributional, and welfare effects of a permanent reduction in the capital tax rate in a quantitative model with capital-skill complementarity and household heterogeneity. Such a tax reform leads to expansionary long-run aggregate output and investment effects, but those are coupled with increases in wage, consumption, and income inequality. The tax reform is not self-financing and its effects depend crucially on whether the government cuts lump-sum transfers or raises distortionary labor or consumption tax rates for financing. The former results in a larger aggregate expansion, but at the expense of a greater rise in inequality. As a result, the latter is relatively more beneficial for unskilled households. We find that the tax reform, when the consumption tax rate adjusts, leads to a Pareto improvement in terms of life-time welfare. For transition dynamics, monetary policy, in addition to the fiscal adjustments, matters. In particular, if monetary policy inflates away a portion of the public debt, the economy can avoid the short-run contraction that would arise otherwise.

Spouses’ earnings association and inequality: A non-linear perspective

We analyze the association between spouses’ earnings taking account of non-linearities along both spouses’ distribution of earnings. We also document the non-linearity of the relationships between earnings and labor force participation, earnings and couple formation, and earnings and number of children. Using simulations, we then analyze how changes in spouses’ rank-dependence structure, labor force participation and couple formation contribute to the upsurge in inequality in the U.S between 1967 and 2018. We find that an increased tendency towards positive sorting contributed substantially to the rise in inequality only among dual-earner couples, while it contributed little to overall inequality across households. Temporal and distributional heterogeneity are important, as earnings association had a more substantial role in the bottom of the earnings distribution and in recent years. The decline in couple formation contributed substantially to the rise in inequality, while the increase in female labor force participation and the fertility decline had equalizing effects.

Ethnic Inequality and Anti-authoritarianism in Sub-Saharan Africa

Is ethnic inequality associated with aversion to authoritarian regimes and increase support for democracy as a means of influencing redistribution? Using four rounds of Afrobarometer panel data, covering 29 African countries and 353 distinct ethnic groups, and an ordered logistic model, we show that a rise in Between-ethnic inequality (BGI) is associated with an increase support for anti-authoritarianism and that its effects strengthen as Within-ethnic inequality (WGI) decreases. We find that individuals most strongly support democracy when ethnic identity is reinforced by economic inequality. We also show that support for a change of regime is reinforced when some ethnic groups believe they are politically excluded from government.

The Effects of Some Social and Economic Indicators on the Gap Between the American Income Inequality Level and Its Optimal Level

Since the last decades of the twentieth century, there has been a debate on the causes and consequences regarding the rise of inequality in its varied dimensions. Much discussion is dedicated to whether public policies should be aimed at reducing or mitigating the upward trend in inequality. This paper explores empirical evidence regarding the income inequality level that maximizes the per capita consumption of the U.S. economy from 1946 to 2015. Based on the cointegration equations empirical tests, we find a concave nonlinear relation between the log of per capita consumption and the log of the Gini Index. In this context, the optimal level of income inequality is 0.376. In addition, we test whether some determinants of inequality show a nonlinear relationship with the square of the difference between the current Gini index and its optimal level, (Gini – Gini*)2. The relation between (Gini-Gini*)2 and education shows an inverted U-shaped curve in which the threshold value wasn’t reached yet but, once the threshold value is reached, more education consumption could reduce income inequality, which can result in better equality of opportunity for most of the American population. However, the indicators of economic openness, taxes, and financial assets show U-shaped curves. Considering the analyzed period from 1946 to 2015, openness and, taxes have contributed to the increase in inequality since the mid-1970s. Besides, financial assets also have contributed to inequality since 2008. However, from 1946 to about 2007, these financial assets, which include credit, contributed to generating lower income inequality.

On the “income advantage” in course choices and admissions: Evidence from the University of the Philippines

The empirical evidence in developed economies suggests a rise in inequality of access to higher education in favor of students from higher-income households. Is this ‘income advantage’ also pronounced in developing economies like the Philippines, where there have been recent deliberate efforts by the government to democratize access to higher education? Using quantitative (logistic regression) analysis on proprietary admissions data from the country’s largest and foremost state university – the University of the Philippines (UP) System (whose students are labeled locally as “Scholars of the People”) – for the period 2006–2015, we find that there is an `income advantage’ not only in terms of being admitted to the UP System, but also in being admitted to the first-choice course cluster: Applicants coming from richer households have higher probabilities of being admitted to UP. However, no such ‘income advantage’ is apparent with regard to the choice of a Science and Technology (S&T) course over a non-S&T course. Other significant determinants of admission to the UP system and to one’s first-choice course cluster are being male, high school grade weighted average, high school type, and high school region. Our results suggest that the new free tuition policy at public universities and colleges, including the UP system, is more likely to disproportionately benefit students coming from higher-income families.

The association between COVID-19 policy responses and mental well-being: Evidence from 28 European countries

This study assesses how the implementation and lifting of non-pharmaceutical policy interventions (NPIs), deployed by most governments, to curb the COVID-19 pandemic, were associated with individuals’ mental well-being (MWB) across 28 European countries. This is done both for the general population and across key-groups. We analyze longitudinal data for 15,147 respondents from three waves of the Eurofound-“Living, Working and COVID-19” survey, covering the period April 2020–March 2021. MWB is measured by the WHO-5 index. Our evidence suggests that restriction on international travel, private gatherings, and contact tracing (workplace closures) were negatively (positively) associated with MWB by about, respectively, −0.63 [95% CI: −0.79 to −0.47], −0.24 [95% CI: −0.38 to −0.10], and −0.22 [95% CI: −0.36 to −0.08] (0.29 [95% CI: 0.11 to 0.48]) points. These results correspond to −3.9%, −1.5%, and −1.4% (+1.8%) changes compared to pre-pandemic levels. However, these findings mask important group-differences. Women compared to men fared worse under stay-at-home requirements, internal movement restrictions, private gatherings restrictions, public events cancellation, school closures, and workplace closures. Those residing with children below 12, compared to those who do not, fared worse under public events cancellation, school closures and workplace closures. Conversely, those living with children 12–17, compared to those who do not, fared better under internal movement restrictions and public events cancelling. Western-Europeans vis-à-vis Eastern-Europeans fared better under NPIs limiting their mobility and easing their debts, whereas they fared worse under health-related NPIs. This study provides timely evidence of the rise in inequalities during the COVID-19 pandemic and offers strategies for mitigating them.

Social justice and the judicial interpretation of international equal protection law

AbstractSocial justice is turning into an international concern. This development is a response to the continuous rise of socioeconomic inequality – the gap between the rich and the poor –growing in several OECD member states since the 1970s. International human rights law (IHRL) presently only establishes a weak normative framework regarding social justice. This article argues that the full potential of this framework has still not been activated by international human rights adjudication. There are several reasons for this: a complex history of ideas suggesting little common understanding of the notion of social justice, the focus of international human rights adjudication on individual rather than constitutional justice, and the priority of liberty rights over equality rights. Yet, the domination of the liberal over the social in international human rights adjudication has started to change. The article shows how the social justice concern is beginning to be incorporated into IHRL by judicial interpretation of international equal protection and non-discrimination law (international equal protection law, IEPL). Integrating the social justice concern into IEPL is a legitimate yet transformative step as it increases judicial discretion at the international level. More than many other human rights, socioeconomic equality is highly context-specific and depends on a complex factual assessment of the local circumstances. This exacerbates the institutional legitimacy challenge levelled against international human rights courts. However, the article argues that the legitimacy challenge can be alleviated by focusing more on procedural rather than a substantive international review.

“Poison to the Economy”: (Un-)Taxing the Wealthy in the German Federal Parliament from 1996 to 2016

The concentration of wealth is a key component of the rise in economic inequality at the beginning of the twenty-first century. While the abolition of taxes on private wealth during the 1990s and 2000s is recognized as an important institutional driver behind this development, comparatively little is known about the justification of tax cuts for the wealthy in advanced democracies. This paper investigates how the abolishment of the personal net wealth tax in Germany, a country with high levels of wealth inequality, has been debated and justified in parliament over a period of 20 years. Using a mixed methods approach that combines computational social science methods and a qualitative analysis, we examine how Germany’s two major parties, the Christian Democrats (CDU) and the Social Democrats (SPD), have variously construed the meaning and purpose of the wealth tax and justified their support for or opposition to it. While the Social Democrats debate the wealth tax primarily from a social justice perspective, the Christian Democrats rely on an efficiency frame that invokes biological metaphors, enabling them to narrate the wealth tax as a threat to the social body. Paradoxically, then, by arguing that the tax is “poison to the economy”, conservative discourse succeeds in linking opposition to the wealth tax to a principle of social unity. On these grounds, we suggest that future research should scrutinize how the interrelation between political discourse and institutional architectures has facilitated the rise of wealth inequality in recent decades.

Earnings dynamics and labor market reforms: The Italian case

This paper summarizes statistics on the key aspects of the distribution of earnings levels and earnings changes using administrative (social security) data from Italy between 1985 and 2016. During the time covered by our data, earnings inequality and earnings volatility increased, while earnings mobility did not change significantly. We connect these trends with some salient facts about the Italian labor market, in particular the labor market reforms of the 1990s and 2000s, which induced a substantial rise in fixed‐term and part‐time employment. The rise in part‐time work explains much of the rise in earnings inequality, while the rise in fixed‐term contracts explains much of the rise in volatility. Both of these trends affect the earnings distribution through hours worked: part‐time jobs reduce hours worked within a week, while fixed‐term contracts reduce the number of weeks worked during the year as well as increase their volatility. We only find weak evidence that fixed‐term contracts represent a “stepping‐stone” to permanent employment. Finally, we offer suggestive evidence that the labor market reforms contributed to the slowdown in labor productivity in Italy by delaying human capital accumulation (in the form of general and firm‐specific experience) of recent cohorts.

The Stalled Gender Revolution and the Rise of Top Earnings in the United States, 1980 to 2017

The steep rise of top wages is acknowledged as one of the main drivers of the rise in earnings inequality between workers in most postindustrial labor markets. Yet its relation to gender stratification, in particular to the stagnation in the gender pay gap, has received very little scholarly attention. Using data from the U.S. Current Population Survey, conducted between 1980 and 2017, we provide evidence of the enormous weight that the dynamic at the top of the earnings distribution exerts on the gender pay gap. We also show how this dynamic inhibits the consequences of the countervailing process of gender vertical desegregation. Although developments in gender inequality and in the rise of top wages have drawn extensive scholarly attention and have even penetrated into the public discourse in recent years, the two dimensions of inequality are often perceived as unrelated to one another. Our findings, then, highlight the connection between different forms of inequality—class inequality and gender inequality—a relation that demands much more attention in the new economy.

Современная концепция регулирования социально-экономического неравенства домохозяйств

Socio-economic inequality is a global problem that, in one way or another, affects any country. High inequality is a threat to the sustainability of democratic institutions and economic growth. That is why a large number of scholars have been drawing attention to this problem for the past couple of decades, during which the overall level of socio-economic inequality has grown both globally and within countries. Are the efforts that regulators are making today enough to contain the rise of socio-economic inequality, and is everything that is being done correct conceptually? These issues have been very relevant over the past few years. The aim of this research is to analyse and develop the concept of a state regulation of socio-economic inequality on a global scale in the UN Sustainable Development Goals program and in Russia at the level of strategic planning documents. The research method is the analysis and synthesis of information from the UN sustainable development program and strategic planning documents for the socio-economic development of Russia. The author has revealed that the goal and concept of regulating socio-economic inequality at the UN level and in Russia are asymmetric relative to the household income distribution curve and have a noticeable shift to its left end. Combating and reducing poverty is a key priority in the regulation of socio-economic inequality in the world. At the same time, the regulation of inequality at the right end of the income distribution curve and the clear state policy of optimizing the growth rate of income and wealth of the richest households are absent or poorly represented in strategic planning documents. As recommendations, the author proposes to use and develop the concept of regulating socio-economic inequality based on Francois Bourguignon’s “poverty - economic growth - inequality” theory.

Changing selection into full-time work and its effect on wage inequality in Germany

To explore whether changes in the selection into full-time work among German men were a driver in the rise in wage inequality since the mid-1990s, we propose a modification of selection-corrected quantile regressions. Addressing Huber and Melly’s (J Appl Econom 30(7):1144–1168, 2015) concerns, this modification allows us to estimate the effects of selection with respect to both observables and unobservables. Our findings show that those employed in 1995 would have had lower wages in 2010 than those employed in 2010 and wage dispersion would have been higher, suggesting that full-time workers have become less heterogeneous over time.