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1 – 10 of over 12000Contrary to the implications of economic theory, consumption inequality in the United States did not react to the increases in income inequality during the last three decades…
Abstract
Contrary to the implications of economic theory, consumption inequality in the United States did not react to the increases in income inequality during the last three decades. This paper investigates if a change in the type of income inequality – from permanent to transitory – or a change in the ability to insure income shocks is responsible for this. A measure of household consumption is imputed into the Panel Study of Income Dynamics to create panel data on income and consumption for the period 1980–2010. The minimum distance investigation of covariance relationships shows that both explanations work together: the share of transitory shocks increases over time, but the capability to insure against permanent and transitory income shocks also improves. Together, these phenomena can explain the lack of an increase in consumption inequality.
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Michael Asiedu, Nana Adwoa Anokye Effah and Emmanuel Mensah Aboagye
This study provides the critical masses (thresholds) at which the positive incidence of finance and economic growth will be dampened by the negative effects of income inequality…
Abstract
Purpose
This study provides the critical masses (thresholds) at which the positive incidence of finance and economic growth will be dampened by the negative effects of income inequality and poverty on energy consumption in Sub-Saharan Africa for policy direction.
Design/methodology/approach
The study employed the two steps systems GMM estimator for 41 countries in Africa from 2005–2020.
Findings
The study found that for finance to maintain a positive effect on energy consumption per capita, the critical thresholds for the income inequality indicators (Atkinson coefficient, Gini index and the Palma ratio) should not exceed 0.681, 0.582 and 5.991, respectively. Similarly, for economic growth (GDP per capita growth) to maintain a positive effect on energy consumption per capita, the critical thresholds for the income inequality indicators (Atkinson coefficient, Gini index and the Palma ratio) should not exceed 0.669, 0.568 and 6.110, respectively. On the poverty level in Sub-Saharan Africa, the study reports that the poverty headcount ratios (hc$144ppp2011, hc$186ppp2011 and hc$250ppp2005) should not exceed 7.342, 28.278 and 129.332, respectively for financial development to maintain a positive effect on energy consumption per capita. The study also confirms the positive nexus between access to finance (financial development) and energy consumption per capita, with the attending adverse effect on CO2 emissions inescapable. The findings of this study make it evidently clear, for policy recommendation that finance is at the micro-foundation of economic growth, income inequality and poverty alleviation. However, a maximum threshold of income inequality and poverty headcount ratios as indicated in this study must be maintained to attain the full positive ramifications of financial development and economic growth on energy consumption in Sub-Saharan Africa.
Originality/value
The originality of this study is found in the computation of the threshold and net effects of poverty and income inequality in economic growth through the conditional and unconditional effects of finance.
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Emmanuel O. Nwosu, Obed Ojonta and Anthony Orji
Enhancing household consumption and reducing inequality are among the fundamental goals of many developing countries. The purpose of this study therefore is to disaggregate…
Abstract
Purpose
Enhancing household consumption and reducing inequality are among the fundamental goals of many developing countries. The purpose of this study therefore is to disaggregate household consumption expenditure into food and non-food and, thus, decompose inequality into within- and between-groups.
Design/methodology/approach
The study adopts generalised entropy (GE) measures. Second, the study uses regression-based inequality decomposition to ascertain the determinants of inequality in food and non-food expenditure using household demographic and socioeconomic characteristics as covariates.
Findings
The results show that non-food expenditure is the major source of inequality in household consumption expenditure in both urban and rural areas with inequality coefficients of above 0.6 compared to about 0.4 for food expenditure. The decompositions also show that within-group inequalities for non-food and food expenditure are, respectively, 0.97 and 0.365 using the Theil index, while between-group inequalities for non-food and food are, respectively, 0.016 and 0.035. Furthermore, the regression-based inequality decompositions show that variables such as living in rural areas, household size, household dwelling and household dwelling characteristics account for the significant proportion of inequality in food and non-food expenditure.
Originality/value
The policy implication of the findings, among others, is that policies should focus on addressing inequality within rural and urban areas, especially with respect to non-food expenditure than in inequality existing between urban and rural areas. These non-food expenditures include expenditure in education, health, energy, accommodation, water and sanitation.
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Pierre-Yves Donzé and Sotaro Katsumata
The purpose of this study is to explore the relationship between income inequality and the demand for high-end luxury wine. The consumption of luxury goods has experienced…
Abstract
Purpose
The purpose of this study is to explore the relationship between income inequality and the demand for high-end luxury wine. The consumption of luxury goods has experienced dramatic growth since 2000 but inequality has been neglected by scholars working on luxury consumption. The exploratory research focuses on wine demand between 2000 and 2019 and analyzes the impact of income inequality among other factors, including gross domestic product (GDP) per capita and GDP growth. The authors want to discern whether highly unequal countries import more expensive wine when compared to countries with lower inequality.
Design/methodology/approach
The authors prepared different data sets based on the year and the trade value of each country to compare the differences and commonalities. The regression models incorporate particular foreign trade statistics (average unit price of wine) as an objective variable and the Gini coefficients to measure the relation between the demand for high-end luxury wines and inequality as an explanatory variable. The models also incorporate other control variables such as economic and institutional conditions.
Findings
The analysis demonstrates a positive relationship between the unit price of imported wine and the level of income inequality of the importers. This research suggests that conspicuous consumption, as a means of social distinction, is a major driver of the luxury wine market. Other significant factors include GDP per capita and geographic proximity. However, countries with a high power distance and bad governance do not purchase more luxury wines than others. Hence, rather than the social acceptation of wealth and corruption, the consumption of luxury wines is driven by the levels of economic development and inequality.
Originality/value
This paper is exploratory research that discusses an underexplored issue: the impact of income inequality on the consumption of luxury goods such as high-end luxury wines. It contributes to the literature on wine consumption, luxury business and income and wealth inequalities. These fields are rarely approached together and the research emphasizes the potential offered by such a perspective.
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The purpose of this study is to examine how renewable energy consumption moderates the relationship between inequality and carbon dioxide (CO2) emissions for Brazil, Russia…
Abstract
Purpose
The purpose of this study is to examine how renewable energy consumption moderates the relationship between inequality and carbon dioxide (CO2) emissions for Brazil, Russia, India, China and South Africa (BRICS). The nexus between energy use and geopolitical tensions has also been explored.
Design/methodology/approach
This study has used distinctive data sets from 1990 to 2018 to explore the interconnections on emission, energy use, inequality and geopolitics. To do away with the difficulties related to heterogeneity and cross-sectional dependence (CD), this paper uses recent estimation methods that are robust to panel heterogeneity and CD.
Findings
The results of the panel augmented mean group (AMG) estimation and common correlated effects mean group (CCEMG) estimation verify the environmental Kuznets curve. The findings show that a 1% rise in Gini inequality leads to a 0.24% rise in the CO2 emission (AMG) method and a 0.17% rise in emissions CCEMG (method). As far as the moderating impact of renewable energy upon Gini measure of inequality is concerned, it is −0.10 AMG and CCEMG methods of estimation, respectively. However, the moderating impact of renewable energy on the geopolitical index leads to a mitigating impact on CO2 emissions, 0.55% decline in AMG method.
Originality/value
This research makes a distinctive contribution by investigating for the first time to the best of the authors’ knowledge the main pillars of sustainable ecological development in the context of the BRICS nations.
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Jiandong Chen, Yinyin Wu, Chong Xu, Malin Song and Xin Liu
Non-fossil fuels are receiving increasing attention within the context of addressing global climate challenges. Based on a review of non-fossil fuel consumption in major countries…
Abstract
Purpose
Non-fossil fuels are receiving increasing attention within the context of addressing global climate challenges. Based on a review of non-fossil fuel consumption in major countries worldwide from 1985 to 2015, the purpose of this paper is to analyze trends for global non-fossil fuel consumption, share of fuel consumption and inequality.
Design/methodology/approach
The similarities were obtained between the logarithmic mean divisia index and the mean-rate-of-change index decomposition analysis methods, and a method was proposed for complete decomposition of the incremental Gini coefficient.
Findings
Empirical analysis showed that: global non-fossil fuel consumption accounts for a small share of the total energy consumption, but presents an increasing trend; the level of global non-fossil fuel consumption inequality is high but has gradually declined, which is mainly attributed to the concentration effect; inequality in global non-fossil fuel consumption is mainly due to the difference between nuclear power and hydropower consumption, but the contributions of nuclear power and hydropower to per capita non-fossil fuel consumption are declining; and population has the greatest influence on global non-fossil fuel consumption during the sampling period.
Originality/value
The main contribution of this study is its analysis of global non-fossil fuel consumption trends, disparities and driving factors. In addition, a general formula for complete index decomposition is proposed and the incremental Gini coefficient is wholly decomposed.
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Juan Ignacio Martín-Legendre, Pablo Castellanos-García and José Manuel Sánchez-Santos
The purpose of this paper is to analyze the changes in wealth and consumption inequality in Spain and estimate the consumption effects of housing and financial wealth.
Abstract
Purpose
The purpose of this paper is to analyze the changes in wealth and consumption inequality in Spain and estimate the consumption effects of housing and financial wealth.
Design/methodology/approach
The estimations are made using micro-data from the Spanish Survey of Household Finances (2002–2014) applying cross-section, panel and interquartile techniques.
Findings
The findings of this paper suggest that there was an increase in wealth inequality during the period under analysis and a reduction in consumption inequality. Also, the authors find a significant positive effect of wealth on consumer expenditure. Disaggregating by asset type, the value of the main residence is the category with the highest estimated effect on consumption, whereas the remaining types of assets, although still positive and generally significant, have more modest effects on consumption. However, the estimated coefficients and their significance can change substantially depending on the phase of the economic cycle and the position of the household in the income distribution.
Originality/value
These results provide new empirical evidence on the effects of household wealth changes on their consumption behavior, the differences depending on the household's position in the distribution and the fluctuations of these estimated coefficients throughout a period of profound economic upheavals.
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Kamila Fialová and Martina Mysíková
The authors aim to demonstrate the impact of allowing for unequal intra-household distribution of resources on income poverty and income inequality.
Abstract
Purpose
The authors aim to demonstrate the impact of allowing for unequal intra-household distribution of resources on income poverty and income inequality.
Design/methodology/approach
The paper applies a collective consumption model to study the intra-household distribution of resources in Visegrád countries (V4). It utilises subjective financial satisfaction as a proxy for indirect utility from individual consumption to estimate the indifference scales within couples instead of the traditional equivalence scale. The European Union Statistics on Income and Living Conditions (EU-SILC) 2013 and 2018 data are applied.
Findings
This study’s results indicate substantial economies of scale from living in a couple that are generally higher than implied by the commonly applied equivalence scale. The sharing rule estimates suggest that at the mean of distribution factors, women receive a consumption share between 0.4 and 0.6; however, some of the results are close to an equal sharing of 0.5. The female consumption share rises with her contribution to household income. Regarding income poverty and inequality, the authors show that both these measures might be underestimated in the traditional approach to equal sharing of resources.
Originality/value
The authors add to the empirics by estimating indifference scales for Czechia (CZ), Hungary (HU), Poland (PL) and Slovakia (SK), countries that have not been involved in previous research.
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Edmond Berisha, David Gabauer, Rangan Gupta and Jacobus Nel
Existing empirical evidence suggests that episodes of financial stress (crises) can act as driver of growth of inequality. Consequently, in this study, the authors explore the…
Abstract
Purpose
Existing empirical evidence suggests that episodes of financial stress (crises) can act as driver of growth of inequality. Consequently, in this study, the authors explore the time-varying predictive power of an index of financial stress for growth in income (and consumption) inequality in the UK. The authors focus on the UK since income (and consumption) inequality data are available at a high frequency, i.e. on a quarterly basis for over 40 years (June, 1975 to March, 2016).
Design/methodology/approach
The authors use Wang and Rossi's approach to analyze the time-varying impact of financial stress on inequality. Hence, the method provides a more appropriate inference of the effect rather than a constant parameter Granger causality method. Besides, understandably, the time-varying approach helps to depict the time-variation in the strength of predictability of financial stress on inequality.
Findings
This study’s findings point that financial distress correspond to subsequent increases in inequality, with the index of financial stress containing important information in predicting growth in income inequality for both in and out-of-sample periods. Interestingly, the strength of the in-sample predictive power is high post the period of the global financial crisis, as was observed in the early part of the sample. The authors believe these findings highlight an important role of financial stress for inequality – an area of investigation that has in general remained untouched.
Originality/value
Accurate prediction of inequality at a higher frequency should be more relevant to policymakers in designing appropriate policies to circumvent the wide-ranging negative impacts of inequality, compared to when predictions are only available at the lower annual frequency.
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Thong Le Pham, Nghiem Tan Le, Nhi Nhat Phuong Ho and Thanh Cong Le
This study aims to analyse the consumption inequality between farm and non-farm households in rural Vietnam, using the data from the 2016 Vietnam household living standards survey.
Abstract
Purpose
This study aims to analyse the consumption inequality between farm and non-farm households in rural Vietnam, using the data from the 2016 Vietnam household living standards survey.
Design/methodology/approach
The present paper applies the “recentered influence functions (RIF)” in “Oaxaca-Blinder (OB)” type decomposition as proposed by Firpo et al. (2018) to allow for the flexible distribution of the outcome variables and the non-randomness of non-farm employment that violates the classical linearity assumption.
Findings
Non-farm households have significantly higher per capita consumption expenditure than farm households for the entire distribution. The gap in expenditure is large at low percentiles and narrowing with higher percentiles. At 10th percentile, the gap is estimated at 27.1%, but it is decreasing to 11.1% at 90th percentile. Most of the gaps are explained by the differences in the observed characteristics between farm and non-farm households such as ethnicity, education, income, internal transmittances and household composition. Non-farm households are endowed with more productive factors that result in higher per capita consumption expenditure.
Originality/value
Gaps in ethnicity and education are found to be key predictors of the inequality in consumption expenditures between farm and non-farm households, then, government policies that are aimed at increasing access to non-farm employment and education for ethnic minorities and for rural poor households are pathways to improve rural household welfare and hence reduce inequality.
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