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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

This study aims to investigate the effect of income and asset diversification on earnings management using discretionary loan loss provisions (LLP) in banks, and the role of risk level in mediating this effect.

A sample of banks operating in Middle East and North Africa countries was used to test the mediation model of Baron and Kenny (1986) with different measures of diversification and risk.

The results show that bank income and asset diversification have unique and combined effects on earnings management. The results also support the idea that a risk-mediating effect contributes to explaining this relationship among banks. Specifically, bank diversification strategies positively affect LLP-based earnings management by increasing bank risk. This result is relevant for conventional banks. However, only a direct and positive effect of diversification strategies on LLP-based earnings management can be observed in Islamic banks, and the indirect effect is not supported.

This study extends previous research by examining the unique and combined effects of income and asset diversification strategies on earnings management in the banking sector. Specifically, it provides new evidence that diversification strategies increase LLP-based earnings management, both directly and indirectly, through bank risk.

This study aims to investigate the effect of smoking on the income of workers in the Brazilian labor market.

Using data from the 2019 National Health Survey (PNS), we initially address the sample selection bias concerning labor market participation by using the Heckman (1979) method. Subsequently, the decomposition of income between smokers and nonsmokers is analyzed, both on average and across the earnings distribution by employing the procedure of Firpo, Fortin, and Lemieux (2009) - FFL decomposition. Ñopo (2008) technique is also used to obtain more robust estimates.

Overall, the findings indicate an income penalty for smokers in the Brazilian labor market across both the average and all quantiles of the income distribution. Notably, the most significant differentials and income penalties against smokers are observed in the lower quantiles of the distribution. Conversely, in the higher quantiles, there is a tendency toward a smaller magnitude of this gap, with limited evidence of an income penalty associated with this habit.

This study presents an important limitation, which refers to a restriction of the PNS (2019), which does not provide information about some subjective factors that also tend to influence the levels of labor income, such as the level of effort and specific ability of each worker, whether smokers or not, something that could also, in some way, be related to some latent individual predisposition that would influence the choice of smoking.

The relevance of the present study is clear in identifying the heterogeneity of the income gap in favor of nonsmokers, as in the lower quantiles there was a greater magnitude of differentials against smokers and a greater incidence of unexplained penalties in the income of these workers, while in the higher quantiles, there was low magnitude of the differentials and little evidence that there is a penalty in earnings since the worker is a smoker.

This study examines the importance of income income-shifting arrangements of US multinational corporations (MNCs) on future stock price crash risk.

This study employs a sample of 7,641 corporation-year observations over the 2005–2017 period and uses ordinary least squares regression analysis.

The authors find that the income-shifting arrangements of MNCs are positively and significantly associated with stock price crash risk after controlling for corporate tax avoidance and other known determinants of stock price crash risk in the regression model. This result is robust to alternative measures of stock price crash risk and income-shifting, and several endogeneity tests. The authors also observe that income-shifting arrangements increase stock price crash risk both directly and indirectly through the information opacity channel. Finally, in cross-sectional analyses, the authors find that the positive association between income-shifting and stock price crash risk is more pronounced for MNCs that use tax haven subsidiaries and have weak corporate governance mechanisms.

The authors provide new empirical evidence that MNCs will likely face significant capital market consequences regarding their income-shifting arrangements.

The present study aimed to provide an understanding of the roles of community-based financial service organizations (i.e. rotating savings and credit associations [ROSCAs] as institutional pillars in facilitating low-income, unbanked consumers’ access to informal financial services).

Semi-structured interviews were conducted with 39 low-income, unbanked consumers participating in ROSCAs in Pakistan, where only 21% of adults have a bank account and almost four out of five individuals live on a low income. The obtained data were analyzed using the thematic analysis technique.

ROSCAs’ regulatory, sociocultural and cognitive aspects facilitate low-income, unbanked consumers’ utilization of informal financial services owing to their approachability by, suitability for, and fairness to such consumers. Thus, they promote such consumers’ financial inclusion.

Low-income consumers are mostly unable to access formal financial services due to the existing supply- and demand-side impediments. Understanding ROSCAs’ institutional functioning can help formal financial service providers create more transformative financial services based on the positive institutional aspects of ROSCAs to enhance poor consumers’ financial inclusion and well-being.

The inclusion of low-income, unbanked consumers in formal banking services will help them better control their finances.

Many low-income, unbanked consumers in developing countries utilize informal financial services to meet their basic financial needs, but service researchers have rarely investigated how informal financial institutions function. The present study showed that ROSCAs, as informal institutions, meet low-income, unbanked consumers’ personal, social and financial needs in a befitting manner, which encourages such consumers to use the financial services offered by ROSCAs.

The challenge of predicting changes in aggregate income and stock prices is one that has occupied the research agendas of economists. This paper aims to use the consumption–income ratio and the dividend–price ratio to predict future income and stock prices.

To examine the stability of the consumption–income ratio and the dividend–price ratio, the authors run a two-variable, two-lag reduced-form VAR in the vein of Cochrane (1994), using a lag of each respective ratio as exogenous to the VAR. Additionally, the authors estimate an AR(4) model for income and prices.

The consumption–income ratio and the dividend–price ratio remain key to understanding future movements in income and stock prices. The consumption–income ratio significantly predicts future income in the USA, and aggregate income is easier to predict than consumption in the VAR model. The dividend–price ratio does not significantly predict future price growth. Consumption and dividend shocks have lasting impacts on income and prices.

The consumption–income ratio and the dividend–price ratio are still key to understanding future movements in income and stock prices. The consumption–income ratio significantly predicts future income in the USA, and aggregate income is easier to predict than consumption in the VAR model. However, the dividend–price ratio does not significantly predict future price growth, a change from previous research from the 1990s, despite the increasing complexity of stock markets. Consumption and dividend shocks have lasting impacts on income and prices and appear to be significant drivers in both the short- and long-run variance in income and prices.

Studies on developed economies showed that imposing taxes on animal-based foods could effectively reduce agricultural greenhouse gas emissions (AGHGEs), while this taxation may not be appropriate in developing countries due to the complex nutritional status across income classes. Hence, this study aims to explore optimal tax rate levels considering both emission reduction and nutrient intake, and examine the heterogenous effects of taxation across various income classes in urban and rural China.

The authors estimated the Quadratic Almost Ideal Demand System model to calculate the price elasticities for eight food groups, and performed three simulations to explore the relative optimal tax regions via the relationships between effective animal protein intake loss and AGHGE reduction by taxes.

The results showed that the optimal tax rate bands can be found, depending on the reference levels of animal protein intake. Designing taxes on beef, mutton and pork could be a preliminary option for reducing AGHGEs in China, but subsidy policy should be designed for low-income populations at the same time. Generally, urban residents have more potential to reduce AGHGEs than rural residents, and higher income classes reduce more AGHGEs than lower income classes.

This study fills the gap in the literature by developing the methods to design taxes on animal-based foods from the perspectives of both nutrient intake and emission reduction. This methodology can also be applied to analyze food taxes and GHGE issues in other developing countries.

This research assesses the economic impact of biomass plant installations on Brazilian municipalities, focusing on (1) labor income, (2) sectoral labor income and (3) income inequality.

Municipal data from the Annual Social Information Report, the National Electric Energy Agency and the National Institute of Meteorology spanning 2002 to 2020 are utilized. The Synthetic Difference-in-Differences methodology is employed for empirical analysis, and robustness checks are conducted using the Doubly Robust Difference in Differences and the Double/Debiased Machine Learning methods.

The findings reveal that biomass plant installations lead to an average annual increase of approximately R$688.00 in formal workers' wages and reduce formal income inequality, with notable benefits observed for workers in the industry and agriculture sectors. The robustness tests support and validate the primary results, highlighting the positive implications of renewable energy integration on economic development in the studied municipalities.

This article represents a groundbreaking contribution to the existing literature as it pioneers the identification of the impact of biomass plant installation on formal employment income and local economic development in Brazil. To the best of our knowledge, this study is the first to uncover such effects. Moreover, the authors comprehensively examine sectoral implications and formal income inequality.

Brazil’s regional inequality is an important topic due to the large and persistent differences in development between states and the high levels of inequality in the country. These variations in development can potentially render survey data inaccurate since the significance of capital income varies across the states. Besides, previous studies incorporating tax and national accounts data globally have mainly focused on measuring the income distribution at the country-level. This approach can limit the understanding of inequality, especially when considering large countries such as Brazil.

The methodology used to construct these estimates follows the guidelines of the Distributional National Accounts, whose core goal is to provide income distribution measures consistent with macroeconomic aggregates and harmonized across countries and time. The procedure has three main steps: first, it corrects the survey’s underrepresentation of top incomes using tax data. Then, it accounts for national income items not included in the survey or tax data, such as imputed rents and undistributed profits. Finally, it ensures that all components match the national income.

Compared to survey-based estimations, the results reveal a new angle on the state-level inequality. This study indicates that Amazonas, Rio de Janeiro and São Paulo have a more concentrated income distribution. The top 1\% of earners in these states receives around 28\% of total pre-tax income, while the top 10\% receive nearly 60\%. On the other end, Amapá (AP), Acre (AC), Rondônia (RO) and Santa Catarina (SC) are the states where the income distribution is less concentrated. There were no significant changes in the income distribution across the states during the period analyzed.

This study combines survey, tax and national accounts data to construct new estimates of Brazil’s state-level income distribution from 2006 to 2019. Previous results only considered income captured in surveys, which usually misses a significant part of capital incomes. This limitation may bias comparisons as capital income has different importance across the states. The new estimates represent the income of top groups more accurately, account for the entire national income and enable to compare regional inequality levels consistently with other countries.

The purpose of this study is to investigate the role of sales, as a proxy for size, in moderating the impact of institutional incongruence between formal and informal institutions on the formalization of microenterprises in middle-income countries in Latin America.

The paper uses a probit regression model to examine business formalization as a binary outcome of formal and informal institutions. Data was collected through interviews and surveys across 52 municipalities in the Metropolitan Region of Santiago, Chile. The study used a stratified sampling approach and was conducted between November 2022 and January 2023.

The results offer three key insights into the formalization of microenterprises in middle-income countries. First, we show that formal institutions do not significantly influence formalization decisions among microentrepreneurs in middle-income countries, challenging the traditional belief that formal institutions alone significantly influence formalization in these contexts. Second, we show that informal institutions are significant predictors of informality, especially among smaller microenterprises. Third, we highlight that the smaller the business, the stronger the negative effect of informal institutions on formalization, and thus, the institutional incongruence between formal and informal institutions decreases for larger businesses.

This paper contributes to management literature by shedding light on the drivers of formalization in middle-income countries, a departure from most formalization studies wherein the focus is primarily on low-income economies. The findings suggest that policymakers in middle-income countries should focus on enabling microenterprise growth through sales, rather than targeting specific demographic groups or relying solely on formal institutional enforcement to promote formalization.

El objetivo de este estudio es investigar el papel de las ventas, utilizadas como un indicador de tamaño, en la mediación del impacto de la incongruencia institucional entre instituciones formales e informales en la formalización de microempresas en países de ingresos medios en América Latina.

Utilizamos un modelo de regresión Probit para examinar la formalización empresarial como un resultado binario de instituciones formales e informales. Los datos se recopilaron a través de 110 entrevistas y encuestas en 52 municipios de la Región Metropolitana de Santiago, Chile. El estudio empleó un enfoque de muestreo estratificado y se llevó a cabo entre noviembre de 2022 y enero de 2023.

Nuestros resultados ofrecen tres ideas clave sobre la formalización de microempresas en países de ingresos medios. Primero, demostramos que las instituciones formales no influyen significativamente en las decisiones de formalización entre las microempresas en países de ingresos medios; esto desafía la creencia tradicional de que las instituciones formales por sí solas influyen significativamente en la formalización en estos contextos. Segundo, nuestro estudio muestra que las instituciones informales son predictores significativos de la informalidad, especialmente entre las microempresas más pequeñas. Tercero, nuestro estudio destaca que el efecto negativo de las instituciones informales sobre la formalización es más fuerte para negocios de menor tamaño; por lo tanto, la incongruencia institucional entre instituciones formales e informales disminuye para negocios de mayor tamaño.

Este artículo contribuye a la literatura iluminando sobre los impulsores de la formalización en países de ingresos medios, a diferencia de la mayoría de los estudios de formalización en la región latinoamericana que se centran principalmente en países de bajos ingresos. Nuestros hallazgos sugieren que los responsables de políticas en países de ingresos medios deberían centrarse en impulsar el crecimiento de las microempresas a través de las ventas, en lugar de enfocarse en grupos demográficos específicos o depender únicamente del cumplimiento institucional formal para promover la formalización.

O objetivo deste estudo é investigar o papel das vendas, usadas como um indicador de tamanho, na mediação do impacto da incongruência institucional entre instituições formais e informais na formalização de microempresas em países de renda média na América Latina.

Utilizamos um modelo de regressão Probit para examinar a formalização empresarial como um resultado binário de instituições formais e informais. Os dados foram coletados por meio de 110 entrevistas e pesquisas em 52 municípios da Região Metropolitana de Santiago, Chile. O estudo empregou uma abordagem de amostragem estratificada e foi realizado entre novembro de 2022 e janeiro de 2023.

Nossos resultados oferecem três ideias-chave sobre a formalização de microempresas em países de renda média. Primeiro, demonstramos que as instituições formais não influenciam significativamente as decisões de formalização entre as microempresas em países de renda média; isso desafia a crença tradicional de que as instituições formais, por si só, influenciam significativamente a formalização nesses contextos. Segundo, nosso estudo mostra que as instituições informais são preditores significativos da informalidade, especialmente entre as microempresas menores. Terceiro, nosso estudo destaca que o efeito negativo das instituições informais sobre a formalização é mais forte para negócios de menor porte; portanto, a incongruência institucional entre instituições formais e informais diminui para negócios de maior porte.

Este artigo contribui para a literatura iluminando os impulsionadores da formalização em países de renda média, ao contrário da maioria dos estudos de formalização na região latino-americana, que se concentram principalmente em países de baixa renda. Nossos achados sugerem que os responsáveis pelas políticas em países de renda média deveriam focar em impulsionar o crescimento das microempresas por meio das vendas, em vez de se concentrar em grupos demográficos específicos ou depender exclusivamente do cumprimento institucional formal para promover a formalização.