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1 – 10 of over 1000João Jungo, Mara Madaleno and Anabela Botelho
Evidence shows that African countries are confronted with high levels of income inequality. Therefore, it is relevant to approach and analyze the factors contributing to these…
Abstract
Purpose
Evidence shows that African countries are confronted with high levels of income inequality. Therefore, it is relevant to approach and analyze the factors contributing to these severe inequality cases. This paper addresses the issue by focusing on the role of financial regulation and military spending.
Design/methodology/approach
We used a sample of 30 African countries and a recent period (2009–2020), employing various instrumental variable estimation techniques to control for endogeneity.
Findings
The results confirm that economic growth aggravates income inequality due to high corruption and political instability. Results confirm that the increase in military spending increases inequality and that financial regulation weakens financial inclusion and also increases income inequality.
Research limitations/implications
The study shows the need for greater control of corruption and the promotion of political stability so that economic growth and financial inclusion can effectively reduce income inequality, as well as the need for a better balance in the drafting of financial regulations and the preparation of military expenditure to safeguard other policy objectives.
Originality/value
The present study contributes to scarce financial, economic, and social literature considering the role of financial regulation and military spending in the persistence of income inequality in African countries. Previous studies disregarded this fact.
Peer review
The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-04-2023-0287
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Olumide Olusegun Olaoye, Mamdouh Abdulaziz Saleh Al-Faryan and Mosab I. Tabash
The objective of the research is threefold. First, the study examines the fiscal policy – income inequality nexus in SA. Second, the study addressed the potential asymmetric…
Abstract
Purpose
The objective of the research is threefold. First, the study examines the fiscal policy – income inequality nexus in SA. Second, the study addressed the potential asymmetric effects in fiscal policy – income inequality nexus in SA (i.e. we assessed the effects of fiscal policy on income inequality at different quantiles of the income inequality) using secondary data from 1980–2020. Third, the study also identifies the optimal fiscal policy instrument that achieve the greatest distributional objectives.
Design/methodology/approach
The study adopts the traditional ordinary least square (OLS) and the innovative Quantile estimation techniques.
Findings
The study found that fiscal policy marginally reduces the income inequality at the lower quantiles (t: 0.05). Specifically, the results show that government spending on health and education reduces income inequality at the lower quantiles (t: 0.05; t: 0.25), albeit exerts a statistically weak impact. On the other hand, the results show that at the upper quantiles, fiscal policy has no statistically significant impact on income inequality. However, we do not find either direct or indirect tax to have any impact on income inequality at any conventional level of significance. This suggests that government spending on health and education have the greater potential to reduce income inequality in South Africa. The research and policy implications are discussed.
Originality/value
The study addressed the asymmetric phenomenon in income inequality-fiscal policy nexus in South Africa.
Peer review
The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-12-2023-0956
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The primary purpose of this study is to explore the effect of technical changes on provincial-level income inequality in Vietnam. The authors also investigate whether the quality…
Abstract
Purpose
The primary purpose of this study is to explore the effect of technical changes on provincial-level income inequality in Vietnam. The authors also investigate whether the quality of institutions and human capital level moderate this relationship.
Design/methodology/approach
This research applies the fixed-effect and random-effect models on a balanced panel data set of 63 Vietnamese provinces/cities from 2010 to 2020.
Findings
The study’s empirical results show that technical improvement has a nonlinear influence on income disparity in Vietnamese localities. When the local level of technology is limited, technological change can mitigate income disparity. However, as local technological levels increase, inequality tends to rise. Moreover, the study also reveals that the quality of a province’s institutions and the level of human resources are factors that moderate the correlation between technological change and income inequality. For provinces with better institutional quality and/or better human resources, inequality tends to decline under the impact of technological change.
Practical implications
The results of this study suggest that while encouraging technology advancement, localities should also ensure sustainable development, reduce income inequality and focus on improving institutional quality and human resources development.
Originality/value
There are increasing concerns about the impact of technical change on inequality in income distribution; however, empirical evidence on this relationship in developing countries remains scarce. This study is among the few attempts to examine this issue at the provincial level of a developing country considering the moderation effect of institutional quality and human capital level.
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Haydory Akbar Ahmed and Hedieh Shadmani
In this research, we explore the dynamics among measures of income inequality in the USA, male and female unemployment rates, and growth in government transfer using time series…
Abstract
Purpose
In this research, we explore the dynamics among measures of income inequality in the USA, male and female unemployment rates, and growth in government transfer using time series data.
Design/methodology/approach
This research adopts a macro-econometric approach to estimate a structural VAR model using time series data.
Findings
Our structural impulse responses found that growth in government transfer increases unemployment rates for both males and females. Female income inequality declines with increased government transfer. When the female income ratio rises, we observe that government transfer outlays fall over the forecast horizon. Variance decomposition finds that growth in government transfers is impacted by the male unemployment rate relatively more than the female unemployment rate. This research, therefore, suggests gender-specific government transfers to reduce income inequality. This, in effect, may reduce government transfer outlays over time.
Practical implications
This research, therefore, suggests gender-specific government transfers to reduce income inequality. This, in effect, may reduce government transfer outlays over time.
Originality/value
This research investigates the dynamics among income inequality, government transfer, and unemployment rates. There is a dearth of research articles that adopt a macro-econometric in this area.
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Redistributive policies aim to reduce income disparities and improve social equity. This study investigates whether redistributive effects that successfully diminish objective…
Abstract
Purpose
Redistributive policies aim to reduce income disparities and improve social equity. This study investigates whether redistributive effects that successfully diminish objective income inequality also effectively alter people’s perceptions of inequality.
Design/methodology/approach
Utilizing data from the 2018 China Household Income Survey (CHIP), comprising 56,167 individuals, this study applies ordered probability regression (Oprobit) and ordinary least squares (OLS) for analysis. To address potential biases in estimates, we employed the generalized propensity score matching (GPSM) method to estimate the treatment effect of transfer income on perceptions of inequality.
Findings
The results indicate that while China’s redistribution policies effectively reduce income disparities, they do not improve perceptions of inequality. Individuals exhibit biased attitudes toward redistributive policies. Specifically, perceptions of inequality are insensitive to the overall redistributive effect; the relationship is negative among the poor but positive among the rich. This contradictory pattern may be attributed to perceived income losses among the rich and gains among the poor.
Social implications
The findings have important implications for policy development. Redistribution policies should not only aim to mitigate income disparities but also address and improve people’s perceptions of inequality.
Originality/value
Existing literature has largely overlooked the impact of redistribution on perceived income inequality. This study represents an early effort to explore whether redistributive policies that reduce income inequality also influence people’s perceptions of inequality.
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This paper aims to contribute to the current debate between the mainstream and the non-mainstream literature on the effect of the growth of finance on the level of income…
Abstract
Purpose
This paper aims to contribute to the current debate between the mainstream and the non-mainstream literature on the effect of the growth of finance on the level of income inequality, for which the empirical evidence has also been providing mixed results.
Design/methodology/approach
We estimate a linear model and a non-linear model by employing a panel autoregressive distributed lag approach and relying on the dynamic fixed-effects estimator because of the existence of variables that are stationary in levels and stationary in the first differences.
Findings
Our findings confirm that finance, economic growth, educational attainment and degree of trade openness have a positive long-term effect on the level of income inequality in the European Union countries, whilst government spending has a negative impact in the short term.
Research limitations/implications
Our findings imply that policy makers should rethink the functioning of the financial system in order to restore a supportive relationship between finance and income inequality and adopt public policies that are more in favour of the poor in order to constrain the growth of income inequality in the European Union countries.
Originality/value
To the best of our knowledge, this is the first paper that, simultaneously, focuses on the European Union countries, assesses the nexus between finance and income inequality, uses three different variables as proxies for the level of income inequality (the Gini coefficient, the top 1% income share and the top 10% income share), measures the variables that are proxies for the level of income inequality in terms of pre-tax and pre-transfer values and as post-tax and post-transfer values, takes into account four different variables as proxies for the role of finance (credit, credit-to-deposit ratio, liquid liabilities and stock market capitalisation) and identifies the long-term and short-term determinants of income inequality.
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Kabiru Kamalu and Wan Hakimah Binti Wan Ibrahim
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…
Abstract
Purpose
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.
Design/methodology/approach
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.
Findings
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).
Originality/value
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.
Peer review
The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-08-2023-0586
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Aadil Amin, Asif Tariq and Masroor Ahmad
The principal aim of this study is to examine the relationship between financial development and income inequality in India using the financial Kuznets curve (FKC) hypothesis.
Abstract
Purpose
The principal aim of this study is to examine the relationship between financial development and income inequality in India using the financial Kuznets curve (FKC) hypothesis.
Design/methodology/approach
This study uses the autoregressive distributed lag (ARDL) model and the Toda–-Yamamoto causality test to investigate the long-run and short-run relationship and causality between financial development and income inequality. In addition, this study employs a principal component analysis (PCA) to construct a comprehensive financial development index.
Findings
The study found a long-run relationship between financial development and income inequality in India for the period under consideration. Trade is found to improve the income distribution, while inflation worsens income distribution. Moreover, the empirical results revealed a feedback causality between financial development and income inequality. The study results confirm an inverted U-shaped relationship between financial sector development indicators and income inequality, thus validating the FKC hypothesis for the Indian economy.
Research limitations/implications
The study draws attention of the government and policymakers, urging them to focus on building a strong financial sector by improving its efficiency. This, in turn, will lead to enhanced financial stability and a reduction in income inequality. They should prioritise the development of high-quality and sustainable financial products and services to ensure the robust growth of the financial sector.
Originality/value
To the best of our knowledge, this study is the latest of its kind to empirically test the financial development on income inequality and the FKC hypothesis simultaneously for the Indian economy using financial proxy variables from financial institutions (FIs) and financial markets (FMs) for the measurement of financial depth.
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Novica Supic, Kosta Josifidis and Sladjana Bodor
The aim of this paper is to shed more light on the foreign direct investment (FDI) - income inequality nexus in the post-communist EU countries. Special attention is paid to the…
Abstract
Purpose
The aim of this paper is to shed more light on the foreign direct investment (FDI) - income inequality nexus in the post-communist EU countries. Special attention is paid to the emergence of a new meritocratic elite related to foreign capital that tends to replace the old elite inherited from the transition period at the top end of the income distribution.
Design/methodology/approach
The macroeconomic model of the relationship between income inequality and FDI is estimated by using the generalized method of moments (GMM) technique. The sample includes 10 post-communist EU member states during the period 1993 to 2020.
Findings
The results suggest that the concentration of the highest level of human capital in foreign-owned enterprises, in the institutional environment under which foreign-owned enterprises are less numerous and pay a higher wage than domestic ones, contributes to the change of the effect of FDI and human capital on income distribution from an initial decrease to a later increase in income inequality.
Originality/value
This paper adds to the existing literature by exploring the distributive impacts of sectoral reallocation of FDI inflows from manufacturing to service sectors from the perspective of heterodox economics. It specifically examines how this shift has facilitated the emergence of a new meritocratic elite associated with foreign capital, which in turn diminishes the overall anti-inequality effect of FDI in the post-communist new EU countries.
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Fabrice Ewolo Bitoto, Cerapis Nchinda Mbognou and Romuald Justin Amougou Manga
The purpose of this paper is to assess the direct effect of climate change on income inequality in Sub-Saharan Africa (SSA) and the channels through which it spreads.
Abstract
Purpose
The purpose of this paper is to assess the direct effect of climate change on income inequality in Sub-Saharan Africa (SSA) and the channels through which it spreads.
Design/methodology/approach
Using a sample of 38 countries, the authors specify and estimate a panel data model using the generalized least squares method over the period 1991–2020. Robustness is achieved through the generalized moment method-system.
Findings
The results show that an increase in vulnerability to climate change is positively and significantly associated with an increase in income inequality. The results also show that the effects of climate change are mediated by gross domestic product/capita, population and agriculture at the 15%, 17% and 24% thresholds, respectively.
Research limitations/implications
The authors suggest the implementation of inclusive development policies consistent with climate mitigation and adaptation objectives; the creation of financial spaces from various sources to finance the social security of the most vulnerable; and the strengthening of agricultural resilience to climate-related adverse events, including financing for greenhouse agriculture.
Originality/value
On the positive side, it contributes to the literature on the analysis of the direct and indirect effects (transmission channels) of climate change on income inequality in SSA. Methodologically, the study goes beyond previous work as it adopts a stepwise methodology, dealing with the endogeneity issue. At the logical level, it offers some non-exhaustive suggestions of potentially interesting economic policies to guide policymakers in their common commitment to “reduce income inequality” (Sustainable Development Goal 10, target 10.1).
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