Rising Income Inequality Research Articles

Hubungan Antara Pertumbuhan Ekonomi dan Ketimpangan Pendapatan di Provinsi Nusa Tenggara Barat (Pembuktian Hipotesis Kuznets)

This study aims to determine the level of income inequality, the relationship between Economic Growth and Income Inequality, and the Kuznets Hypothesis. The method used is the Williamson Index, Theil Entropy Index, Pearson Correlation, and the Kuznets Hypothesis. The results obtained from the Williamson Index and Theil Entropy Indeks between districts/cities in the Province of NusaiSoutheastern West 2001-2020 show a trim income inequality level with values ​​of 0.22 and 0.02. The results obtained from the Pearson Correlation between Regencies/Citiesiin West Nusa Tenggara Province in 2001-2020 showed a relationship. Still, it was less intense because it was at 0.257 and 0.303. The results obtained from the visual analysis illustrate the relationship between Economic Growth and Income Inequality, forming an inverted U, which means that in the early period of economic growth, there was an increase in income inequality, as evidenced by the continued growth of economic growth from 2001 to 2010 but was followed by the rise in income inequality—rising income inequality. Then, in the next period, namely in 2011 to 2020, economic growth continued to grow but was followed by a decrease in income inequality, meaning that the Kuznets Hypothesis turned out to be valid in the Province of West Nusa Tenggara in 2001-2020.

Income inequality, ecological footprint, and carbon dioxide emissions in Asian developing economies: what effects what and how?

The reduction of income inequality and environmental vulnerability is the most important factor, through which we can achieve the target of Sustainable Development Goals (SDGs). The past papers have investigated the nexus between income inequality and carbon emissions; however, the relationship between income inequality and carbon emissions along with ecological footprint has not been studied in the case of developing countries. To this end, this study analyzed the impact of income inequality on both carbon emissions and ecological footprint as well as the impact of carbon emission and ecological footprint on income inequality by using the dataset from 2006 to 2017 for the 18 Asian developing economies. This study confirmed the positive relationship between carbon emissions, ecological footprint, and income inequality under the methodology of Driscoll and Kraay (D&K) standard error approach. Specifically, a higher-income gap is destructive for environmental degradation, whereas increasing level of carbon emissions and ecological footprint also leads to rising income inequality in the investigated region. Furthermore, foreign direct investment (FDI), easy access to electricity, and population growth control income inequality, but they have a detrimental effect on both ecological footprint and carbon emissions. The empirical findings also provide some important policy implications.

Income inequality and trade of ‘Made in China’

This paper presents a theory and empirical evidence on how destination countries’ income inequality affects the export price and volume of Chinese products. We provide a simple model to illustrate exporters’ market dynamics and product-quality specialization induced by the change in the destination country's income distribution. Under the nonhomothetic preference assumption, the model predicts that higher income inequality makes Chinese exporters who produce low-quality products concentrate on serving low-income consumers, which accounts for a large proportion of the population. Exploiting highly disaggregated customs transaction records of Chinese exporters, we provide empirical evidence consistent with the model predictions: (i) A rise in income inequality leads to a lower export price, (ii) induces entry of new exporters, and (iii) leads to higher export value and export price dispersion.

Unequal values: equality and race in state of the union addresses, 1960–2018

AbstractWe analyze the prevalence and framing of references to equality and inequality in presidential state of the union addresses (SOTUs) delivered between 1960 and 2018. Despite rising income inequality and increased attention among political elites to structural inequalities of race and gender in recent years, we find very few direct or indirect references to inequality as a social problem and surprisingly few references even to the ostensibly consensual and primary values of equal opportunity and political equality. References to racial inequality have been few and far between since the height of the civil rights era. By contrast, another primary value in the American political tradition—economic individualism are a major focus in these SOTUs. We trace the scant presence of equality talk in these speeches to the ambiguous scope of egalitarian goals and principles and their close tie-in with race in America. We rely on automated text analysis and systematic hand-coding of these speeches to identify broad thematic emphases as well as on close reading to interpret the patterns that these techniques reveal.

The Silicon Valley Syndrome

How does expansion in the high-tech sector influence the broader economy of a region? We demonstrate that an infusion of venture capital in a region leads to: (i) declines in the number of establishments and in employment in non–high-tech industries in the tradable sector; (ii) increases in entry and in employment in the non-tradable sector; and (iii) a rise in income inequality in the non-tradable sector. Expansion in the high-tech sector therefore leads to a less diverse tradable sector and to increasing inequality in the region.

Forbidden Fruits: The Political Economy of Science, Religion, and Growth

AbstractWe study the co-evolution of religion, science, and politics. We first uncover, in international and U.S. data, a robust negative relationship between religiosity and patents per capita. The model then combines: (1) scientific discoveries that raise productivity but sometimes erode religious beliefs; (2) a government that allows innovations to diffuse, or blocks them; (3) religious institutions that can invest in doctrinal reform. Three long-term outcomes emerge. The “Western-European Secularization” regime has declining religiosity, unimpeded science, and high taxes and transfers. The “Theocratic” regime involves knowledge stagnation, unquestioned dogma, and high religious-public-goods spending. The “American” regime combines scientific progress and stable religiosity through doctrinal adaptations, with low taxes and some fiscal-legal advantages for religious activities. Rising income inequality can, however, empower a Religious-Right alliance that starts blocking belief-eroding ideas.

How does income inequality affect the support for populist parties?

ABSTRACT Recent studies provide evidence that income inequality is a relevant driver for the electoral success of populist parties all over Europe. In this article, we aim to understand how exactly increasing income inequality can lead to support for populist parties. More specifically, we discuss four different attitudinal mechanisms from previous research: economic insecurities, trust in political elites, social integration, and national identity. We rely on eight waves of the European Social Survey and find that economic insecurities, trust in political elites, and national identity are linked to rising income inequality and populist support as expected. However, a causal mediation analysis shows that these mechanisms are not sufficient to fully understand the impact of income inequality on support for populists. This finding raises questions regarding the empirical support of existing theories to explain how macroeconomic changes in inequality became a pre-condition for the rise of populist parties.

Inequality in Life and Death

We argue that the COVID epidemic disproportionately affected the economic well-being and health of poor people. To disentangle the forces that generated this outcome, we construct a model that is consistent with the heterogeneous impact of the COVID recession on low- and high-income people. According to our model, two-thirds of the inequality in COVID deaths reflect preexisting inequality in comorbidity rates and access to quality health care. The remaining third stems from the fact that low-income people work in occupations where the risk of infection is high. Our model also implies that the rise in income inequality generated by the COVID epidemic reflects the nature of the goods that low-income people produce. Finally, we assess the health–income trade-offs associated with fiscal transfers to the poor and mandatory containment policies.

The interplay of economic vote dimensions: inequality, redistribution preferences and support for incumbents

Economic voting is multidimensional (covering valence, patrimony and positional dimensions), and a growing number of research contributions have explored the existence and strength of the effect of these dimensions on voting. However, we know comparatively little about the interplay between these dimensions. This article fills that void by focusing on how the interplay between the rise of income inequality (the valence dimension) and redistribution preferences (the positional dimension) influences support for incumbents. Using the Comparative Study of Electoral Systems (CSES) Modules 4 and 5, I find that preferences for income redistribution reduce the likelihood of voters supporting incumbent parties. Modest evidence demonstrates that this relationship is stronger in countries where inequality increased to a greater degree between elections. Voters who want more redistribution tend to re-elect left-wing governments and want to throw out right-wing incumbents. However, rise of inequality hurts both left-wing and right-wing incumbents.

Marriage Market Counterfactuals Using Matching Models

We use a simple structural matching model with unobserved heterogeneity to produce counterfactual marriage patterns, and thus quantify the contribution of changes in marital patterns in rising income inequality. We propose an algorithm that allows us to fix the degree of assortative mating without changing the level of marital gains and hence isolate the intensive and extensive margins (i.e. isolate changes in assortative mating from changes in marriage rates). We apply this approach to US data from 1962 to 2017, and show that marital patterns can explain about a quarter of the rise in income inequality, the intensive margin contributing 7%, the extensive margin the remaining 93%. Our algorithm also allows us to show that the extensive margin is itself driven for three‐fifths by a change in the total number of singles and for two‐fifths by a change in the distribution of types among singles (in particular low‐educated women).

Misattributed blame? Attitudes toward globalization in the age of automation

AbstractMany, especially low-skilled workers, blame globalization for their economic woes. Robots and machines, which have led to job market polarization, rising income inequality, and labor displacement, are often viewed much more forgivingly. This paper argues that citizens have a tendency to misattribute blame for economic dislocations toward immigrants and workers abroad, while discounting the effects of technology. Using the 2016 American National Elections Studies, a nationally representative survey, I show that workers facing higher risks of automation are more likely to oppose free trade agreements and favor immigration restrictions, even controlling for standard explanations for these attitudes. Although pocket-book concerns do influence attitudes toward globalization, this study calls into question the standard assumption that individuals understand and can correctly identify the sources of their economic anxieties. Accelerated automation may have intensified attempts to resist globalization.

Digital social innovation: An overview and research framework

Digital social innovation: An overview and research framework

Financialization and income inequality: bringing class struggle back in

Financialization and rising income inequality are two of the most pronounced economic developments of recent decades, and there is increasing evidence that these trends are somehow related. However, explanations of this link are still limited, and pay little attention to workers themselves. As a result, the impact of financialization on income inequality appears at most as an unfortunate side-effect. This article takes a different approach by investigating both financialization and income inequality from within the historical development of the class struggle in the United States economy. It shows that the economic problems of the 1970s that provided the impetus for financialization were closely related to the escalating conflicts between labor and capital, in which the state served as an increasingly important terrain of struggle. Viewed from this perspective, rising income inequality appears less as an unexpected outcome of financialization and more as its very raison d’etre.

Stock Market Booms and Labor Bargaining Power

This essay argues that there is a connection among modern stock market booms, the rising income inequality trend of the last four decades, and labor bargaining power. The essay also contends that the institutional and policy backdrop in any given economic era impacts the ability of economic actors and groups to influence their relative income standing, and therefore the political-economic structure matters. The basic argument is that there is an interplay between changes in wages relative to profits with stock valuations, that is, there exists a bidirectionality between income distribution and stock price booms. The paper offers an explanation for the major stock price run-ups in the 21st century.

Changes in Couples' Earnings Following Parenthood and Trends in Family Earnings Inequality.

The growing economic similarity of spouses has contributed to rising income inequality across households. Explanations have typically centered on assortative mating, but recent work has argued that changes in women’s employment and spouses’ division of paid work have played a more important role. We expand this work to consider the critical turning point of parenthood in shaping couples’ division of employment and earnings. Drawing on three U.S. nationally representative surveys, we examine the role of parenthood in spouses’ earnings correlations between 1968 and 2015. We examine the extent to which changes in spouses’ earnings correlations are due to (1) changes upon entry into marriage (assortative mating), (2) changes between marriage and parenthood, (3) changes following parenthood, and (4) changes in women’s employment. Our findings show that increases in the correlation between spouses’ earnings prior to 1990 came largely from changes between marriage and first birth, but increases after 1990 came almost entirely from changes following parenthood. In both instances, changes in women’s employment are key to increasing earnings correlations. Changes in assortative mating played little role in either period. An assessment of the aggregate-level implications points to the growing significance of earnings similarity after parenthood for rising income inequality across families.

Income Inequality and the depth of economic downturns

Using an international panel data set, we analyse the implications of rising income inequality for aggregate consumption. We document that greater concentration of (after-tax) income in the top decile is associated with a significantly larger and more persistent contraction in consumption in the aftermath of economic downturns. These findings are consistent with lower propensities to consume among wealthier households and imply that disparities in income flows at turning points of the business cycle can significantly influence macroeconomic outcomes.

Prediction of High-Tech Talents Flow Impact on Labor Income Share: Based on DEA and Fractional Hausdorff Grey Model

The purpose of this paper is to analyze the impact of high-tech talents flow on labor income share and explore the influencing mechanism. It can be proved that high-tech talents flow affects labor income share by production function, with technological progress as a mediator variable. The labor income share is the dependent variable, and the gravity of high-tech talents as the independent variable is the index to measure the high-tech talents flow, constructing the panel data model with the Malmquist index of technological progress as a mediator variable. Furthermore, the Malmquist index of technological progress is decomposed into catching-up of technological progress index and leapfrogging of technological progress index, which, respectively, replaces the Malmquist index of technological progress as a mediator variable in the panel data model. Regression analysis shows that technological progress is a mediator variable for high-tech talents flow to reduce labor income share, and the impact mainly comes from leapfrogging of technological progress. However, although the mediating effect of catching-up technological progress index is not significant at the significance level of 10%, it is a mediator variable for high-tech labor mobility to increase income share at the significance level of 20%. Finally, this paper predicts the change in labor income share from 2018 to 2027 by the fractional Hausdorff grey model, and the results show that it is an increasing trend. However, the Gini coefficient whose change trend is opposite to the labor income share remains high in the past two years, indicating that there are other factors affecting the income gap, such as the urbanization rate and the transportation convenience. The innovation of this paper is mainly to reveal that the leapfrogging of technological progress is the major cause of the high-tech talents flow rising income inequality gap, while the catching-up of technological progress is the source of the former narrowing the latter. The fractional Hausdorff grey model predicts that the key determinants of income inequality gap are more than labor income share.

Should Robots Be Taxed?

Abstract Using a quantitative model that features technical progress in automation and endogenous skill choice, we show that, given the current U.S. tax system, a sustained fall in automation costs can lead to a massive rise in income inequality. We characterize the optimal tax system in this model. We find that it is optimal to tax robots while the current generations of routine workers, who can no longer move to non-routine occupations, are active in the labour force. Once these workers retire, optimal robot taxes are zero.

Rising Corporate Power and Declining Labor Share in the Era of Chicago School Antitrust

: Industrial concentration has led to rising profit shares, higher price markups, and a decline in business investment. In this article, we connect those phenomena to the rise of the Chicago School of Antitrust and its more lenient antitrust treatment of large corporations that parallels the decline in the labor share for U.S. workers. Our analysis of the U.S. manufacturing sector and components of the profit rate provides evidence for the rising profit shares and the slower capital accumulation in the highly concentrated sectors of U.S. manufacturing, and thus the laissez-faire bent of Chicago School antitrust toward corporate bigness during the period of declining labor shares should be recognized as another strong contributor to rising income inequality in the United States over this period.

Income Inequality and Financial Disturbances: Does Income Inequality Engender Financial Crises?

This paper is an empirical study that used econometric techniques to analyze the causal relationship between income inequality and financial disturbances in developed economies. The author used annual data from panels of OECD countries. In this study, income distribution is represented by the share of GDP that accrued to the top 10 percent earners, wage share of GDP, and disposable income Gini Coefficient in annual data series. The test included three channels, through which income inequality may affect the financial system. The results suggest that the effect of income inequality on the national financial stability is ambiguous, as the study concluded that this effect is radically different according to the channel tested. The study found that a rise in income inequality has a negative impact on public finance, but it has a positive effect on the private debt market, and on the external balance from a financial stability standpoint.