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Dipyaman Pal, Chandrima Chakraborty and Arpita Ghose

The present study aims to determine the existence of simultaneous relationship between economic growth, income inequality, fiscal policy, and total trade of the 13…

Abstract

The present study aims to determine the existence of simultaneous relationship between economic growth, income inequality, fiscal policy, and total trade of the 13 emerging market economies as a group for the period 1980–2010. After establishing the existence of simultaneity between the above relationships, a simultaneous panel model has been formulated and estimated incorporating the nonlinearity among the variables as suggested by the existing literature. An inverted U-shape relationship is evident between (1) economic growth, income inequality, and total trade in economic growth equation, (2) income inequality, economic growth, and per capita income in income inequality equation, and (3) total trade and economic growth in total trade equation. Thus, the existence of a two-way nonlinear relationship is highlighted between economic growth, income inequality, and total trade. Apart from these nonlinear relationships, positive and significant effect of (1) gross capital formation, inflation, population growth, human capital, fiscal policy, monetary policy, and domestic credit to private sector on economic growth; (2) civil liabilities on income inequality; (3) gross capital formation and inflation on total trade; (4) total trade, population growth of those aged 65 years and above, political system on fiscal policy is highlighted. Also, negative and significant effect of (1) fiscal policy on income inequality and (2) income inequality on fiscal policy is revealed.

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The Gains and Pains of Financial Integration and Trade Liberalization
Type: Book
ISBN: 978-1-83867-004-7

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Stewart Lansley

Until the 2008 Crash, the prevailing economic orthodoxy, accepted across the broad political spectrum, was that inequality was a necessary condition for economic health…

Abstract

Until the 2008 Crash, the prevailing economic orthodoxy, accepted across the broad political spectrum, was that inequality was a necessary condition for economic health. The evidence of the last four decades is that this trade-off theory – that you can have more equal or more efficient economies but not both – is incorrect. Not only do excessive concentrations of income and wealth bring social dislocation and breed public discontent with democratic institutions, but a number of studies have shown that inequality on today’s scale brings slower growth and greater economic turbulence. Although there is now a broad acceptance amongst global leaders that inequality poses significant risks for social cohesion and economic stability, there has been little or no action to match the high level verbal war against inequality. As a result, inequality has carried on rising within nations since 2008. In the United Kingdom, the gap between the top and bottom has continued to widen, in part because post-2010 governments have weakened the pro-equality role of the state. Tackling inequality is now one of the most pressing issues of the day – an economic as well as a social imperative – while reversing this four decade long trend will require a major restructuring of the pro-market economic models in place across most of the rich world.

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Inequalities in the UK
Type: Book
ISBN: 978-1-78714-479-8

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Kamol Chumrusphonlert, John P. Formby and John A. Bishop

Dominance techniques are used to analyze and rank inequality, welfare, and poverty across regions in Thailand in the 1990s. Inference-based dominance methods are applied…

Abstract

Dominance techniques are used to analyze and rank inequality, welfare, and poverty across regions in Thailand in the 1990s. Inference-based dominance methods are applied to consumption expenditure microdata from the Household Socio-Economic Surveys (SES) of 1992, 1994, 1996, 1998 and 2000. Attention is focused on the period immediately before and after the economic contraction of 1996–1997. Lorenz dominance is employed to assess inequality, while first-order Engel food share dominance is applied to rank welfare across time and among regions. Poverty is evaluated by comparing truncated food-share quantile functions. The evidence reveals that the economic crisis in 1997 seems to affect inequality in Bangkok (the richest region) more than the Northeast (the poorest region), and most dramatic changes occur in the North and South. Welfare in Bangkok is unambiguously higher than in other regions before and after economic contraction. In fact, the great economic contraction changes the rankings of economic well-being and poverty only in the North, South, and Northeast.

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Studies on Economic Well-Being: Essays in the Honor of John P. Formby
Type: Book
ISBN: 978-0-76231-136-1

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Sarah Giroux, Parfait Eloundou-Enyegue, John W. Sipple and Michel Tenikue

Does education still serve as a great equalizer today? Does today’s worldwide expansion of schooling foster a global economic convergence? These questions need fresh…

Abstract

Does education still serve as a great equalizer today? Does today’s worldwide expansion of schooling foster a global economic convergence? These questions need fresh answers at this time of growing concern over inequality. Past studies have abundantly documented the effects of schooling on within-country inequality, but we know little about corresponding effects on between-country inequality. We fill this gap by drawing on two innovations. The first is to formulate a theory of global inequality that integrates international differences in both the quantity and quality of education. The second, methodological, innovation is to propose and apply a method for decomposing trends in global inequality in GDP in terms of five social forces that include the quantity and quality of schooling. Analyses focus on the 1990–2010 period. The results confirm the continued salience of education: Trends in education account for as much as 80% of the 1990–2010 decline in between-country GDP inequality. However, we find a declining significance of “quantity” over “quality.” In sum, education remains salient as a global equalizer but its salience increasingly depends on bridging international differences in school quality.

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Annual Review of Comparative and International Education 2019
Type: Book
ISBN: 978-1-83867-724-4

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Article

Dale Tweedie and James Hazelton

The purpose of this paper is to encourage and advance interdisciplinary accounting research on economic inequality.

Abstract

Purpose

The purpose of this paper is to encourage and advance interdisciplinary accounting research on economic inequality.

Design/methodology/approach

The authors review prior research into economic inequality, including two new papers in this issue, to identify topics where economic inequality and accounting research intersect. The authors then draw on prior accounting research to identify frameworks accounting scholars already use apposite to analysing these topics.

Findings

Economic inequality cuts across major accounting topics, including measurement, reporting and tax. Inequality also bears on an influential agenda in interdisciplinary accounting research to hold corporations and states accountable for their impacts. Four prior research frameworks accounting scholars might apply to this agenda are: critical Marxian or post-Marxian; accounting ethics; advocacy; and disclosure studies.

Social implications

A growing body of social scientific research, as well as influential global institutions, social movements and political debates, raise concerns over inequitable global distributions of wealth and income. The authors explore ways accounting scholars can help redress these inequities.

Originality/value

While economic inequality affects billions of people, accounting scholarship is yet to give these inequities the attention their scale and social impact merits. The authors suggest ways accounting researchers can make substantive contributions to addressing this issue.

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Accounting, Auditing & Accountability Journal, vol. 32 no. 7
Type: Research Article
ISSN: 0951-3574

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Stephen Lippmann, Amy Davis and Howard E. Aldrich

Nations with high levels of economic inequality tend to have high rates of entrepreneurial activity. In this paper, we develop propositions about this relationship, based…

Abstract

Nations with high levels of economic inequality tend to have high rates of entrepreneurial activity. In this paper, we develop propositions about this relationship, based upon current research. Although we provide some descriptive analyses to support our propositions, our paper is not an empirical test but rather a theoretical exploration of new ideas related to this topic. We first define entrepreneurship at the individual and societal level and distinguish between entrepreneurship undertaken out of necessity and entrepreneurship that takes advantage of market opportunities. We then explore the roles that various causes of economic inequality play in increasing entrepreneurial activity, including economic development, state policies, foreign investment, sector shifts, labor market and employment characteristics, and class structures. The relationship between inequality and entrepreneurship poses a potentially disturbing message for countries with strong egalitarian norms and political and social policies that also wish to increase entrepreneurial activity. We conclude by noting the conditions under which entrepreneurship can be a source of upward social and economic mobility for individuals.

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Entrepreneurship
Type: Book
ISBN: 978-0-76231-191-0

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Article

Md Nasir Uddin and Saran Sarntisart

The purpose of this paper is to find the effects of human capital inequality on economic growth.

Abstract

Purpose

The purpose of this paper is to find the effects of human capital inequality on economic growth.

Design/methodology/approach

Thailand Labor Force Survey has been used to generate provincial average years of schooling and Gini coefficient of years of schooling for the years 1995‒2012. Econometric techniques have been employed to identify the effects of human capital inequality on economic growth.

Findings

Economic growth is inversely affected by the distribution of human capital in Thailand. The coefficient of human capital inequality suggests that if Gini coefficient increases by 0.01 points, gross provincial product (GPP) decreases by about 2 percentage points in the long run. However, the effect of average years of schooling in GPP is not significant.

Research limitations/implications

There is a lack of strong theoretical background for the relationship between human capital inequality and economic growth to support the empirical study.

Practical implications

The findings of the study help to design and evaluate education policies in developing countries like Thailand and other low- and middle-income countries.

Originality/value

This paper is among the first attempts to analyze the effect of human capital inequality on economic growth with sub-national level annual data. In addition, it considers cross sectional dependence in panel model.

Details

International Journal of Social Economics, vol. 46 no. 7
Type: Research Article
ISSN: 0306-8293

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Article

Cássio Nobrega Besarria, Jevuks Matheus Araujo, Andrea Ferreira da Silva, Erika Fernanda Miranda Sobral and Thiago Geovane Pereira

The purpose of this paper is to investigate the effects of income inequality on the economic growth of Brazilian states in the period from 1994 to 2014. The transmission…

Abstract

Purpose

The purpose of this paper is to investigate the effects of income inequality on the economic growth of Brazilian states in the period from 1994 to 2014. The transmission mechanism of the effects of income inequality on economic growth is derived from the model proposed by Halter et al. (2014).

Design/methodology/approach

The empirical formulation adopted to achieve this goal is divided into two stages. The first stage is limited to short-term analysis, and panel data models with fixed effects, random effects, and instrumental variables are used. In the second stage, the discussion turns to the use of the error correction model for a cointegrated panel.

Findings

The findings of this study suggest that inequalities in income and educational level are the principal determinants of different growth rates among Brazilian states. More specifically, it is found that additional years of schooling positively influence growth. By contrast, income inequality negatively affects this indicator.

Originality/value

The present study differs from the others in that it adapts the discussion proposed by Halter et al. (2014) to the analysis of Brazilian states. Halter et al. (2014) derive the transmission channel between income inequality and economic growth, showing a non-monotonic adjustment trajectory of production that leads to a linear theoretical model of income inequality and economic growth that is similar to those used in this type of approach.

Details

International Journal of Social Economics, vol. 45 no. 3
Type: Research Article
ISSN: 0306-8293

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Article

Olugbenga Onafowora and Oluwole Owoye

The purpose of this paper is to investigate the income inequality dynamics in each of the 50 states of USA over the period 1981-2011.

Abstract

Purpose

The purpose of this paper is to investigate the income inequality dynamics in each of the 50 states of USA over the period 1981-2011.

Design/methodology/approach

The paper estimates an augmented Kuznets curve panel Vector AutoRegression in per capita income, economic freedom, educational attainment, unemployment, and population ageing along with evaluating generalized impulse responses functions (GIRF) and generalized forecast-error variance decompositions (GFEVD).

Findings

All the variables are integrated of order one and are panel cointegrated. Kuznets’ hypothesized inverted U-shaped relationship between inequality and growth is not supported by the data. Unemployment and population ageing have statistically significant positive effects on inequality in the long-run; education has statistically significant negative impact; economic freedom has statistically insignificant positive effect. Long-run bidirectional causality exists among the variables. GFEVD show that excluding income inequality itself, variation in income inequality is more influenced by perturbations in per capita income, educational attainment, and unemployment. GIRF corroborate the results of the GFEVD.

Originality/value

This paper fulfills an identified need to study the causal relationship between inequality and its determining factors without assuming the a priori exogeneity or endogeneity of the underlying variables.

Details

International Journal of Social Economics, vol. 44 no. 6
Type: Research Article
ISSN: 0306-8293

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