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Faced with contradictory outcomes in empirical studies on the relation between democracy and income inequality, this paper attempts to provide empirical relations between democracy and income inequality. In particular, the authors seek to find if any curvilinear relation exists as in the Kuznets hypothesis.

Given elusiveness in empirical relations, the authors will consider several specifications using different estimation methods such as ordinary least squares (OLS), panel data estimation and performing statistical tests to determine the best specification for the relation between income inequality and democracy. Once the authors choose the specification, then the authors will apply this specification to the different groups of data to find any meaningful implications.

Using the unbalanced panel of 136 countries spanning from 1980 to 2018, the authors found an inverse U-shaped relation, called a political Kuznets curve – income inequality increases first and then decreases later as more democracy is achieved. By quantifying the curve, the authors find that the direct impact of democracy on income inequality is small and that the incremental impact of democracy on income inequality is smaller in a semi-democracy while relatively larger in a full democracy and autocracy.

From the study’s findings, the following policy implications can be considered. First, any change in income inequality caused by democratization should not be concerning as the impact of democracy on income inequality is measured to be very small. Second, the largest factor reducing income inequality is real GDP per capita. Third, the authors find that an impact of government expenditure on income inequality is also inversely U-shaped.

This paper aims to investigate the effects of financial access, financial depth, financial efficiency and financial stability pillars on income inequality and poverty among a panel of sub-Saharan African (SSA) countries.

This paper captures cross-sectional dependence among the income groups through the dynamic common correlated effect approach for a data set of 28 selected SSA countries from 2000 to 2017.

This study reveals that the financial development pillars exert positive and significant impacts on income inequality across the income groups. The results show that the effects of the financial development metrics on poverty are different across the income groups. The results also indicate that the pillars improve poverty reduction for low- and lower-middle-income countries. However, there is a minimal effect on poverty reduction in upper-middle-income countries. The differences among these income categories suggest the need for policymakers to account for income levels when prescribing policies that could engender financial development and poverty reduction in the region.

This paper examines the effects of financial development on both income inequality and poverty by using the newly developed World Bank financial development strategic metrics. It captures cross-sectional dependence in the full sample of selected SSA countries and their income categories.

This study examines the effect of digitalization on poverty and income inequality in developing countries. The study answers the question of whether digitalization is a way for developing countries to get out of poverty and income inequality.

The study uses data from 17 developing countries with data from 2005 to 2021. The study employs fully modified ordinary least squares (FMOLS) and dynamic ordinary least squares (DOLS), with an augmented mean group (AMG) for robustness. Digitalization, as the variable of interest, is proxied by the digitalization index (DI), constructed using principal component analysis (PCA). The dependent variables are poverty and income inequality, which are used in different models.

The evidence indicates that digitalization decreases poverty and income inequality in developing countries. These findings are justified when we use the AMG estimator, but the strength of the coefficients and significance levels are higher in the FMOLS and DOLS estimators. The results of the control variables also show that human development (LHDI), CO2 emissions and foreign direct investment (FDI) have decreasing effects on poverty and income inequality. Thus, digitalization is a good option for developing countries to get out of poverty and income inequality to achieve sustainable development goals (1&10).

This study provides rigorous empirical evidence on the effect of digitalization on poverty and income inequality in developing countries. Unlike the previous studies on developing countries, this study used a DI to proxy digitalization. In addition, the authors use FMOLS and DOLS estimators, with an AMG estimator for robustness, to provide long-run coefficients.

The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-08-2023-0586

The primary focus of this study is to examine the distributional consequences of the widespread increase in prices. The fundamental question the study aims to address is whether the dynamics of income distribution due to higher inflation differ in the short term compared to the long run.

The authors estimated a panel-data model (fixed effects) using inequality and inflation data available at a high frequency, i.e. on a quarterly basis for over 30 years, and found evidence that inflation causes rapid swings in income distribution.

The authors’ contribution to the literature lies in providing evidence that inflation rapidly causes swings in income distribution, even after controlling for the state of the economy. The authors also demonstrate that the magnitude and direction of the effect of inflation on income inequality depend on whether the initial inflation rate is below or above the Federal Reserve’s target of 2%.

To the best of the authors’ knowledge, the authors are the first to emphasize that the targets set by central banks can drive the strength and direction of the relationship between inflation and income inequality.

The purpose of this paper is to investigate the adjustment of government redistributive policies in Scandinavian and Mediterranean countries following changes in income inequality over the period 1980–2021.

The authors first modelled the time-varying dynamics between income inequality and redistribution and then used a non-linear framework to test for the existence of asymmetries and cointegration in their long-run relationship. The authors used two complementary measures of inequality – the share of total income accruing to top percentile income holders and the ratio of the share of total income accruing to top decile income holders divided by that accumulated by the bottom 50% – and computed redistribution as the difference between the two inequality indicators before and after taxes and transfers.

The authors found that the sign of the relationship between income inequality and redistribution is mostly positive and time-varying. Overall, the authors also found evidence that the impact of increases in inequality on redistributive measures is higher than that of decreases. Finally, the authors obtained a significant long-run relationship between both variables in all countries except Denmark and Spain. These results hold for both Scandinavian and Mediterranean countries.

To the best of the authors’ knowledge, this is the first paper to account for the potential existence of non-linearities and to examine the asymmetries in the adjustment of redistributive policies to increases in income inequality using alternative income inequality metrics.

Personal remittance and ready-made garments (RMG) export incomes have emerged as the largest source of foreign income for Bangladesh's economy. The study investigates their impact on income inequality and gross domestic product (GDP) as a control variable, using time-series yearly data from 1983 to 2018.

It employs the Autoregressive Distributed Lag (ARDL) estimation and the Toda-Yamamoto (T-Y) causality approach. The ARDL estimation outcomes confirm a long-run association among the above variables and validate the autoregressive characteristic of the model.

Personal remittances positively contribute to reducing the income gap among the people of the society and declining income inequality. In contrast, RMG export income and economic growth contribute to further income inequality. The T-Y causality analysis follows the ARDL estimation outcomes and authenticates their robustness. It reveals a feedback relationship between remittance inflow and the Gini coefficient, unidirectional causalities from RMG export income to income inequality and economic growth to income inequality.

The finding has important policy implications to limit the income gaps between low and high-income groups by channeling incremental income to the lower-income group people. The policymakers may facilitate further international migration to attract further remittances and may upgrade the minimum wage of the RMG workers.

The study is original. As far as the authors' knowledge goes, this is a maiden attempt to investigate the impact of personal remittances and RMG export income on income disparity in the case of Bangladesh.

The present study investigates the role of fiscal illusion on income inequality in 46 selected countries in terms of income and development levels from 2002 to 2017.

The effect of fiscal illusion on income inequality is tested using the two-step system generalized method of moment (SYS-GMM) estimator.

The findings reveal the negative effect of fiscal illusion on income inequality, which means increasing fiscal illusion decreases income inequality in 46 selected countries. As in other countries, income inequality declines when fiscal illusion increases in high-income and developed countries, although the redistributive effect of fiscal illusion is more in high-income and developed countries than in other countries. In addition, the results demonstrate the positive effect of unemployment, urbanization and inflation as well as the negative effect of trade openness on income inequality in all three models.

Previous studies have examined the role of government in controlling income inequality from different perspectives; however, no study has detected the role of government in income distribution regarding fiscal illusion.

The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-05-2022-0311.

This paper aims to investigate the role of corruption and income inequality in three-dimensional sustainable development in the post-Soviet countries.

The methodology is based on dynamic panel regression with the fixed effects approach.

The authors' findings depict that increasing corruption and income inequality undermine sustainable development. Specifically, increasing corruption and income inequality negatively affect sustainable development. Moreover, unemployment and trade liberalization negatively impact sustainable development, whereas foreign direct investments (FDIs) positively affect sustainable development.

Policy implications enclose galvanizing strong institutions and redistributive policy mechanisms that the bottom income groups enjoy in promoting sustainable development to keep away the distressful phase of corruption and income inequality.

This is the first paper on corruption, income inequality and sustainable development in the post-Soviet countries employing a sustainable development index (SDI), which is calculated by considering three factors including economic, social and environmental development.

The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-01-2023-0065

We investigate the role of fiscal policy, through several measures of government revenues and expenditures and redistribution, on disposable and market income inequality and economic growth as well as the interaction between inequality and growth for 31 European countries from 1995 to 2019.

We use a simultaneous equations model to assess the linkage between economic growth, inequalities and fiscal policy variables.

(1) While disposable income inequality has a negative effect on all fiscal policy variables, market income inequality has a mixed effects; (2) for Eastern European countries, public consumption and direct taxation positively influence economic growth; conversely, for Western European countries, the effects are negative; (3) disposable and market income inequality have a positive effect on growth for Eastern European countries, and a negative influence on growth for Western European countries; (4) growth contributes to the increase of disposable and market income inequality for Eastern European countries; for Western European countries, the effects are opposite; and (5) fiscal policy allows for the attenuation of disposable income inequality.

The different results between the role of market and disposable income inequality levels lead us to suggest tax progressivity as an important feature to consider when analyse the trivariate relationship between inequalities, fiscal policy and growth. Furthermore, there are different dynamics between inequality and growth, and the role of fiscal policy, on both Eastern and Western European countries.