The pursuit of having an appropriate level of income inequality should be viewed as one of the biggest challenges facing academic scholars as well as policy makers. Unfortunately, research on this issue is currently lacking. This study is the first to introduce the theoretical concept of targeted level of income inequality for a given size of population. By employing the World Bank's data on population size and Gini coefficient from sixty-nine countries in 2012, this study finds that the relationship between Gini coefficient and natural logarithm of population size is nonlinear in the form of a second-degree polynomial function. The estimated results using regression analysis show that the majority of countries in the sample have Gini coefficients either too high or too low compared to their appropriate values. These findings could be used as a guideline for policy makers before designing and implementing public policies in order to achieve the targeted level of income inequality.
In the recent times of global Covid pandemic, the Federal Reserve has raised the concerns of upsurges in prices. Given the complexity of interaction between inflation and inequality, we examine whether the impact of inflation on inequality differs among distinct levels of income inequality across the US states. Results reveal that there is a negative contemporaneous effect of inflation on the inequality which becomes stronger with higher levels of income inequality. However, over a one year period, we find higher inflation rate to further increase income inequality only when income inequality …
To simultaneously overcome the limitation of the Gini index in that it is less sensitive to inequality at the tails of income distribution and the limitation of the inter-decile ratios that ignore inequality in the middle of income distribution, an inequality index is introduced. It comprises three indicators, namely, the Gini index, the income share held by the top 10%, and the income share held by the bottom 10%. The data from the World Bank database and the Organization for Economic Co-operation and Development Income Distribution Database between 2005 and 2015 are used to demonstrate how t…
This paper used a primary data collected through a surveys among farmers in rural Kedah to examine the effect of non farm income on poverty and income inequality. This paper employed two method, for the first objective which is to examine the impact of non farm income to poverty, we used poverty decomposition techniques - Foster, greer and Thorbecke (FGT) as has been done by Adams (2004). For the second objective, which is to examine the impact of non farm income to income inequality, we used Gini decomposition techniques.
Using three rounds of NSS datasets, the present paper attempts to understand the relationship between income inequality and intergenerational income mobility (IGIM) by segregating generations into social and income classes. The originality of the paper lies in assessing the IGIM using different approaches, which we expect to contribute to the existing literature. We conclude that the country has low-income mobility and high inequality which is no longer associated with a particular social class in India. Also, both may have a negative or positive relationship, hence needs to be studied at a re…
A common assumption in the literature is that the level of income inequality shapes individuals' beliefs about whether the income distribution is fair (``fairness views,'' for short). However, individuals do not directly observe income inequality (which often leads to large misperceptions), nor do they consider all inequities to be unfair. In this paper, we empirically assess the link between objective measures of income inequality and fairness views in a context of high but decreasing income inequality. We combine opinion poll data with harmonized data from household surveys of 18 Latin Ameri…
A mathematical model of measurement of the perception of well-being for groups with increasing incomes, but proportionally unequal is proposed. Assuming that welfare grows with own income and decreases with relative inequality (income of the other concerning one's own), possible scenarios for long-term behavior in welfare functions are concluded. Also, it is proved that a high relative inequality (parametric definition) always implies the loss of the self-perception of the well-being of the most disadvantaged group.
This paper investigates the relationships between economic growth, investment in human capital and income equality in Turkey. The conclusion drawn based on the data from the OECD and the World Bank suggests that economic growth can improve income equality depending on the expenditures undertaken by the government. As opposed to the standard view that economic growth and income inequality are positively related, the findings of this paper suggest that other factors such as education and healthcare spending are also driving factors of income inequality in Turkey. The proven positive impact of in…
We argue that the recent growth in income inequality is driven by disparate growth in investment income rather than by disparate growth in wages. Specifically, we present evidence that real wages are flat across a range of professions, doctors, software engineers, auto mechanics and cashiers, while stock ownership favors higher education and income levels. Artificial Intelligence and automation allocate an increased share of job tasks towards capital and away from labor. The rewards of automation accrue to capital, and are reflected in the growth of the stock market with several companies now …
This research aims to provide an overview of the existing inequalities and their drivers in the member states of the European Union as well as their developements in the 2002-2008 and 2009- 2015 sub-periods. It also analyses the impact of health and education government spending on income inequality in the European Union over the 2002-2015 period. In this context, I applied the Estimated Generalized Least Squares method using panel data for the 28-member states of the European Union.
Income inequality distribution between social groups has been a global challenge. The focus of this study is to investigate the potential impact of female income on family size and purchasing power. Using statistical methods such as simple linear regression, maximum likelihood analysis, and hypothesis testing, I evaluated and investigated the variability of female pre-tax income with respect to family size. The results obtained from this study illustrate that for each additional household member, the average purchasing power decreases. Additionally, the Bayesian analysis indicates that the pro…
We explore the role of non-ergodicity in the relationship between income inequality, the extent of concentration in the income distribution, and mobility, the feasibility of an individual to change their position in the income distribution. For this purpose, we explore the properties of an established model for income growth that includes "resetting" as a stabilising force which ensures stationary dynamics. We find that the dynamics of inequality is regime-dependent and may range from a strictly non-ergodic state where this phenomenon has an increasing trend, up to a stable regime where inequa…
This study tries to find the relationship among poverty inequality and growth. The major finding of this study is poverty has reduced significantly from 2000 to 2016, which is more than 100 percent but in recent time poverty reduction has slowed down. Slower and unequal household consumption growth makes sloth the rate of poverty reduction. Average annual consumption fell from 1.8 percent to 1.4 percent from 2010 to 2016 and poorer households experienced slower consumption growth compared to richer households.
This study examines the relationship between globalization and income inequality, utilizing panel data spanning from 1992 to 2020. Globalization is measured by the World Bank global-link indicators such as FDI, Remittance, Trade Openness, and Migration while income inequality is measured by Gini Coefficient and the median income of 50% of the population. The fixed effect panel data analysis provides empirical evidence indicating that globalization tends to reduce income inequality, though its impact varies between developed and developing countries. The analysis reveals a strong negative corre…
Linking Economic Complexity, Institutions and Income Inequality
Macro Connections, The MIT Media Lab（麻省理工学院媒体实验室）；Fraunhofer Center for International Management and Knowledge Economy（弗劳恩霍夫国际管理与知识经济中心）；Chair for Innovation Management und Economics, University of Leipzig（莱比锡大学创新管理与经济学教席）；Department of Computer Science, Universidad de Playa Ancha（阿纳查海滩大学计算机科学系）；Department of Informatics, Universidad Técnica Federico Santa María（费德里科·圣玛丽亚技术大学信息学系）
Exponential Structure of Income Inequality: Evidence from 67 Countries
Southwest University（西南大学）；Hangzhou Dianzi University（杭州电子科技大学）；University of Electronic Science and Technology of China（电子科技大学）；Xi’an Jiaotong University（西安交通大学）；University of Maryland, College Park（马里兰大学帕克分校）
The distribution of household income is a central concern of modern economic policy due to its strong influence on life quality. Yet, non-expert audiences are unaware of the relationship between these two factors. To effectively communicate the effect of income inequality on the quality of life and among the strata, we have designed a novel technique for visualizing income distribution and inequality over time by using the U.S. household income microdata from the Current Population Survey. The result is a striking dynamic animation of income distribution over time, drawing public attention and…
The question about fair income inequality has been an important open question in economics and in political philosophy for over two centuries with only qualitative answers such as the ones suggested by Rawls, Nozick, and Dworkin. We provided a quantitative answer recently, for an ideal free-market society, by developing a game-theoretic framework that proved that the ideal inequality is a lognormal distribution of income at equilibrium. In this paper, we develop another approach, using the Nash Bargaining Solution (NBS) framework, which also leads to the same conclusion. Even though the conclu…
This paper aims to review the different impacts of income inequality drivers on the Gini coefficient, depending on institutional specificities. In this context, we divided the European Union member states in two clusters (the cluster of member states with inclusive institutions / extractive institutions) using the institutional pillar as a clustering criterion. In both cases, we assesed the impact of income inequality drivers on Gini coefficient by using a fixed effects model in order to examine the role and importance of the institutions in the dynamics of income disparities.The models were e…
I measure the uncertainty affecting estimates of economic inequality in the US and investigate how accounting for properly estimated standard errors can affect the results of empirical and structural macroeconomic studies. In my analysis, I rely upon two data sets: the Survey of Consumer Finances (SCF), which is a triennial survey of household financial condition, and the Individual Tax Model Public Use File (PUF), an annual sample of individual income tax returns. While focusing on the six income and wealth shares of the top 10 to the top 0.01 percent between 1988 and 2018, my results suggest…
We propose a highly schematic economic model in which, in some cases, wage inequalities lead to higher overall social welfare. This is due to the fact that high earners can consume low productivity, non essential products, which allows everybody to remain employed even when the productivity of essential goods is high and producing them does not require everybody to work. We derive a relation between heterogeneities in technologies and the minimum Gini coefficient required to maximize global welfare. Stronger inequalities appear to be economically unjustified. Our model may shed light on the ro…
Examining the Impact of Income Inequality and Gender on School Completion in Malaysia: A Machine Learning Approach Utilizing Malaysia's Public Sector Open Data
This paper undertakes a near real-time analysis of the income distribution effects of the COVID-19 crisis in Australia to understand the ongoing changes in the income distribution as well as the impact of policy responses. By semi-parametrically combining incomplete observed data from three different sources, namely, the Monthly Longitudinal Labour Force Survey, the Survey of Income and Housing and the administrative payroll data, we estimate the impact of COVID-19 and the associated policy responses on the Australian income distribution between February and June 2020, covering the immediate p…
The article presents the results of multivariate classification of Russian regions by the indicators characterizing the population income and their concentration. The clusterization was performed upon an author approach to selecting the characteristics which determines the academic novelty in the evaluation of regional differentiation by population income and the interconnected characteristics. The performed analysis was aimed at the evaluation of the real scale of disproportions in spatial development of the country territories by the considered characteristics. The clusterization results all…
We provide a survey of the Kolkata index of social inequality, focusing in particular on income inequality. Based on the observation that inequality functions (such as the Lorenz function), giving the measures of income or wealth against that of the population, to be generally nonlinear, we show that the fixed point (like Kolkata index k) of such a nonlinear function (or related, like the complementary Lorenz function) offer better measure of inequality than the average quantities (like Gini index). Indeed the Kolkata index can be viewed as a generalized Hirsch index for a normalized inequalit…
Each individual in society experiences an evolution of their income during their lifetime. Macroscopically, this dynamics creates a statistical relationship between age and income for each society. In this study, we investigate income distribution and its relationship with age and identify a stable joint distribution function for age and income within the United Kingdom and the United States. We demonstrate a flexible calibration methodology using panel and population surveys and capture the characteristic differences between the UK and the US populations. The model here presented can be utili…
Given many popular functional forms for the Lorenz curve do not have a closed-form expression for the Gini index and no study has utilized the observed Gini index to estimate parameter(s) associated with the corresponding parametric functional form, a simple method for estimating the Lorenz curve is introduced. It utilizes 3 indicators, namely, the Gini index and the income shares of the bottom and the top in order to calculate the values of parameters associated with the specified functional form which has a closed-form expression for the Gini index. No error minimization technique is require…
Across income groups and countries, individual citizens perceive economic inequality spectacularly wrong. These misperceptions have far-reaching consequences, as it is perceived inequality, not actualinequality informing redistributive preferences. The prevalence of this phenomenon is independent of social class and welfare regime, which suggests the existence of a common mechanism behind public perceptions. The literature has identified several stylised facts on how individual perceptions respond to actual inequality and how these biases vary systematically along the income distribution. We p…
Biobased energy, particularly corn starch-based ethanol and other liquid renewable fuels, are a major element of federal and state energy policies in the United States. These policies are motivated by energy security and climate change mitigation objectives, but corn ethanol does not substantially reduce greenhouse gas emissions when compared to petroleum-based fuels. Corn production also imposes substantial negative externalities (e.g., nitrogen leaching, higher food prices, water scarcity, and indirect land use change). In this paper, we utilize a partial equilibrium model of corn-soy produc…
Structural Change, Employment, and Inequality in Europe: an Economic Complexity Approach
European Commission, Joint Research Center（欧盟委员会联合研究中心）；Enrico Fermi Research Center（恩里科·费米研究中心）；UNU-MERIT and Maastricht University（联合国大学欧洲社会研究所学术院和马斯特里赫特大学）
During recent crisis, wage subsidies played a major role in sheltering firms and households from economic shocks. During COVID-19, most workers were affected and many liberal welfare states introduced new temporary wage subsidies to protected workers' earnings and employment (OECD, 2021). New wage subsidies marked a departure from the structure of traditional income support payments and required reform. This paper uses simulated datasets to assess the structure and incentives of the Irish COVID-19 wage subsidy scheme (CWS) under five designs. We use a nowcasting approach to update 2017 microda…
In this study, we extend the research on the dynamic poverty indexes, namely the dynamic Headcount ratio, the dynamic income-gap ratio, the dynamic Gini and the dynamic Sen, proposed in D'Amico and Regnault (2018). The contribution is twofold. First, we extend the computation of the dynamic Gini index, thus the Sen index accordingly, with the inclusion of the inequality within each class of poverty where people are classified according to their income. Second, for each poverty index, we establish a central limit theorem that gives us the possibility to determine the confidence sets. An applica…
