Income Inequality - Our World In Data
By applying OLS and 2SLS significant negative relationship is found between financial development and income inequality.
# How has inequality in the UK changed over the very long run
Montek Ahluwalia (1976) followed up on the work of Paukert and determined the relationship between income inequality and per capita growth rate using crosscountry data. His sample included sixty countries—forty developing countries, fourteen developed countries, and six socialist countries. Ahluwalia’s results showed that an inverted U-shape could be fitted onto the countries at various stages of development and income inequality. However, the slope of the fitted curve changed when he looked at the sample of developing countries. These results were, however, obtained by controlling for socialist countries, because their policies tend to move countries toward development. Ahluwalia suggested that these results may be "stylized facts" for which an explanation may not be possible.
We use data from the Current Population Survey (CPS 1994-2001) to document the relationship between gender-specific demographic variations and the gender-poverty gap among eight racial/ethnic groups. We find that black and Puerto Rican women experience a double disadvantage owing to being both women and members of a minority group. As compared with whites, however, gender inequality among other minority groups is relatively small. By utilizing a standardization technique, we are able to estimate the importance of gender-specific demographic and socioeconomic composition in shaping differences in men's and women's poverty rates both within and across racial/ethnic lines. The analysis reveals that sociodemographic characteristics have a distinct effect on the poverty rate of minority women, and that the form and the magnitude of the effect vary across racial/ethnic lines. By incorporating the newly available immigration information in the CPS data, we are also able to document the effect of immigration status on gender inequality. The social and economic implications of the findings for the study of gender inequality are discussed in the last section of the article.
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Gabriel Zucman: In terms of who are the top earners, a lot of them are indeed corporate executives in various industries. So, finance is an important component; it is far from all of it. In lots of industries--in finance, in the health care industry, manufacturing. So, across the board--in the pharmaceutical industry--you've seen the pay of the top executives grow automatically faster than average worker pay. That's part of what's happening. But, the data we have now, getting back to our distributional national accounts, shows that most of the--now, the majority of the income of top 1% earners is not labor income. Is not wages and salaries and stock options and bond indices[?]. It's actually capital income. And that's a relatively new development. In the 1980s, 1990s, the rise of U.S. income inequality was essentially driven by an increase in labor income inequality--the upsurge of top corporate executive pay. Since 2000, it's been very different: labor income inequality actually has , might even have declined internally[?]. All of the rise of the top 1% income share since 2000 owes to an increase in , in the dividend income, corporate profits, interest that high-income earners get. And as important, because, of course, the forces that shape the distribution of labor income and the distribution of wealth and capital income are quite different. And so if you want to understand rising inequality in recent years in the United States, you need to ask yourself, 'Okay. Is coming from capital. So, what's the reason for that?' So, one potential explanation is that these high-labor incomes of the 1980s, 1990s, have been saved at a pretty high rate, and so these high earners have been accumulating quite a lot of wealth. That wealth itself, it generates some return; and so capital income, which in turn is flow of capital income, is being saved at high rates. So, wealth further accumulates and capital income concentrations further increases. And, I think that this is what is happening in the United States at the moment. Not everything corresponds to that. But that was not very important in the 1980s and 1990s. Now it's becoming very important. Capital income at the top is more important than labor income.
N2 - It has been suggested that, especially in countries with high per capita income, there is an independent effect of income distribution on the health of individuals. One source of evidence in support of this relative income hypothesis is the analysis of aggregate cross-section data on population health, per capita income and income inequality. We examine the empirical robustness of cross-section analyses by using a new data set to replicate and extend the methodology in a frequently cited paper. The estimated relationship between income inequality and population health is not significant in any of our estimated models. We also argue there are serious conceptual difficulties in using aggregate cross-sections as a means of testing hypotheses about the effect of income, and its distribution, on the health of individuals. (C) 2002 Elsevier Science Ltd. All rights reserved.
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This study analyzed the relationships between SPRII and selected health outcomes among urban Chinese youth. A novel contribution to the RII literature is that this study assessed two distinct types of RII: self-perceived income relative to peers (SPRII-S) and relative to the past (SPRII-P). With SPRII assessed in both interpersonal and temporal dimensions, the findings support the hypothesis that both SPRII-S and SPRII-P independently influence general health status as well as selected psychological and behavioral outcomes.
Interaction analyses were conducted to explore potential moderators of the patterns of associations between SPRII variables and the outcomes. Gender was evaluated as a moderator because previous studies have identified gender differences in determinants of physical health (), psychological health (), and health behavior (). The analyses were subsequently conducted separately among boys and girls because many of the gender interactions were significant. AHI was evaluated as a moderator to determine whether the relationship between income inequality and health varies according to actual income level (; ). Sampling-related parameters (student’s age group, school rank, school type, city district, and city) were evaluated as moderators as a sensitivity test of whether the estimated relationships would likely vary with different sample composition ().
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The development of the permanent income/life cycle consumption hypothesis was a key blow to Keynesian and Kaleckian economics. According to George Akerlof, it "set the agenda" for modern neoclassical macroeconomics. This paper focuses on the relationship of housing wealth to neoclassical consumption theory, and in particular, the degree to which homes can be treated collectively with other forms of "permanent income." The neoclassical analysis is evaluated as a partly normative and partly positive one, in recognition of the dual function of the neoclassical theory of rationality. The paper rests its critique primarily on the distinctive role of homes in social life; theories that fail to recognize this role jeopardize the social and economic goods at stake. Since many families do not own large amounts of assets other than their places of residence, these issues have important ramifications for the relevance of consumption theory as a whole.
Why Stopping Tax “Reform” Won’t Stop Inequality
We examine the economic well-being of the elderly, using the Levy Institute Measure of Economic Well-Being (LIMEW). Compared to the conventional measures of income, the LIMEW is a comprehensive measure that incorporates broader definitions of income from wealth, government expenditures, and taxes. It also includes the value of household production. We find that the elderly are much better off, relative to the nonelderly, according to our broader measure of economic well-being than by conventional income measures. The main reason for the higher relative LIMEW of the elderly is the much higher values of income from wealth and net government expenditures for the elderly than the nonelderly. There are pronounced differences in well-being among the population subgroups within the elderly. The older elderly are worse off than the younger elderly, nonwhites are worse off than whites, and singles are worse off than married couples. We also find that the degree of inequality in the LIMEW is substantially higher among the elderly than among the nonelderly. In contrast, inequality in the most comprehensive measure of income published by the Census Bureau is virtually identical among the elderly and nonelderly. The main factor behind the degree of inequality, as the decomposition analysis reveals, is the greater size and concentration of income from nonhome wealth in the LIMEW compared to extended income (EI).
What Causes Gender Inequality? -- Robert Max Jackson
This paper examines the generosity of the European welfare state toward the elderly. It shows how various dimensions of the welfare regimes have changed during the past 10 to 15 years and how this evolution is related to the process of economic integration. Dimensions include general generosity toward the elderly and, more specifically, generosity toward early retirement and generosity toward the poor. Using aggregate data (EUROSTAT, OECD) as well as individual data (SHARE, the new Survey of Health, Ageing, and Retirement in Europe), the paper looks at the statistical correlations among those types of system generosity and actual policy outcomes, such as unemployment and poverty rates among the young and the elderly, and the inequality in wealth, income and consumption. While the paper is largely descriptive, it also tries to explain which economic and political forces drive social expenditures for the elderly in the European Union and whether spending for the elderly crowds out spending for the young.
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