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Book part
Publication date: 15 July 2020

Di Tong, Daniel Tzabbar and Haemin Dennis Park

We explore how absolute and relative incomes affect an individual's propensity to start a new business as a pure or hybrid entrepreneur. Using a sample of 12,686

Abstract

We explore how absolute and relative incomes affect an individual's propensity to start a new business as a pure or hybrid entrepreneur. Using a sample of 12,686 individuals from the National Longitudinal Survey of Youth, 1979 cohort (NLSY79) in our empirical analyses, we find that individuals with high absolute income are generally less likely to engage in entrepreneurship. However, once absolute income is controlled, those with above-average relative income are more likely to become an entrepreneur, particularly in pure form as opposed to a hybrid one. Our findings provide more nuanced understanding on the differences between absolute and relative income levels influencing an individual's decision to become an entrepreneur, and if so, whether to engage in pure or hybrid form.

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Employee Inter- and Intra-Firm Mobility
Type: Book
ISBN: 978-1-78973-550-5

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Article
Publication date: 2 October 2007

Kenneth V. Greene and Phillip J. Nelson

The purpose of this paper is to reexamine the idea currently rampant in the mainstream economics literature that it is relative rather than real income that is of most…

Abstract

Purpose

The purpose of this paper is to reexamine the idea currently rampant in the mainstream economics literature that it is relative rather than real income that is of most importance for individual well‐being and that both evidence on expressed happiness and individual “choices” in surveys provide strong evidence for that position.

Design/methodology/approach

A reconsideration of the theory, extensive new survey results, and presentation of material relevant for individuals' actual choices.

Findings

The idea that other's higher incomes leaves others worse off really is not convincing, the evidence from surveys that people really have preferences for living in societies where their relative income is high at the expense of real income is wrong and that people's actual choices reveal them to be interested in real rather than relative income.

Practical implications

Those social commentators who deride the negative externalities generated by individual pursuit of higher incomes and who advocate considerably more progressive taxes have still not provided good evidence to make their case.

Originality/value

The originality lies in providing an analysis of extensive surveys of positional preferences that allows for the demonstration that responses depend on survey structure and respondent knowledge levels and in shedding new light and doubts on previous attempts to use surveys to attempt to bolster the case that relative income is of overriding importance for individual welfare.

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International Journal of Social Economics, vol. 34 no. 11
Type: Research Article
ISSN: 0306-8293

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Article
Publication date: 3 May 2013

Jayanta Sen and Dipti Prakas Pal

Individuals earn their income from different sources in an economy. Persons being engaged with different occupations have different income levels. Welfare level thus…

Abstract

Purpose

Individuals earn their income from different sources in an economy. Persons being engaged with different occupations have different income levels. Welfare level thus varies from person to person. Obviously an indignant feeling arises out of interpersonal shortages of income which is viewed as relative deprivation of the person to whom shortages are inflicted. This paper attempts to analyse geometrically inter‐temporal variations in relative deprivation.

Design/methodology/approach

Temporal movement has been analysed in terms of iso‐deprivation curves.

Findings

Reduction in relative deprivation is the cherished goal of every welfare economy. But how it should be pursued is a matter of concern to the policy makers. In the present analysis five paths are discussed along which the deprivation level may be reduced. The most desirable path is identified.

Originality/value

Different components and their relative contributions to changes in relative deprivation have been identified in a geometrical decomposition framework. The analysis is of use in framing policies for reduction in relative deprivation and increase in social well‐being.

Details

International Journal of Social Economics, vol. 40 no. 6
Type: Research Article
ISSN: 0306-8293

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Article
Publication date: 8 August 2019

Zhan Wang, Xiangzheng Deng and Gang Liu

The purpose of this paper is to show that the environmental income drives economic growth of a large open country.

Abstract

Purpose

The purpose of this paper is to show that the environmental income drives economic growth of a large open country.

Design/methodology/approach

The authors detect that the relative environmental income has double effect of “conspicuous consumption” on the international renewable resource stock changes when a new social norm shapes to environmental-friendly behaviors by using normal macroeconomic approaches.

Findings

Every unit of extra demand for renewable resource consumption increases the net premium of domestic capital asset. Even if the technology spillovers are inefficient to the substitution of capital to labor force in a real business cycle, the relative income with scale effect increases drives savings to investment. In this case, the renewable resource consumption promotes both the reproduction to a higher level and saving the potential cost of environmental improvement. Even if without scale effects, the loss of technology inefficient can be compensated by net positive consumption externality for economic growth in a sustainable manner.

Research limitations/implications

It implies how to earn the environment income determines the future pathway of China’s rural conversion to the era of eco-urbanization.

Originality/value

We test the tax incidence to demonstrate an experimental taxation for environmental improvement ultimately burdens on international consumption side.

Details

Forestry Economics Review, vol. 1 no. 1
Type: Research Article
ISSN: 2631-3030

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Book part
Publication date: 10 October 2017

Oded Stark, Grzegorz Kosiorowski and Marcin Jakubek

A transfer from a richer individual to a poorer one seems to be the most intuitive and straightforward way of reducing income inequality in a society. However, can such a…

Abstract

A transfer from a richer individual to a poorer one seems to be the most intuitive and straightforward way of reducing income inequality in a society. However, can such a transfer reduce the welfare of the society? We show that a rich-to-poor transfer can induce a response in the individuals’ behaviors which actually exacerbates, rather than reduces, income inequality as measured by the Gini index. We use this result as an input in assessing the social welfare consequence of the transfer. Measuring social welfare by Sen’s social welfare function, we show that the transfer reduces social welfare. These two results are possible even for individuals whose utility functions are relatively simple (namely, at most quadratic in all terms) and incorporate a distaste for low relative income. We first present the two results for a population of two individuals. We subsequently provide several generalizations. We show that our argument holds for a population of any size, and that the choice of utility functions which trigger this response is not singular – the results obtain for an open set of the space of admissible utility functions. In addition, we show that a rich-to-poor transfer can exacerbate inequality when we employ Lorenz-domination, and that it can decrease social welfare when we draw on any increasing, Schur-concave welfare function.

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Research on Economic Inequality
Type: Book
ISBN: 978-1-78714-521-4

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Book part
Publication date: 16 November 2016

Satya R. Chakravarty, Nachiketa Chattopadhyay, Joseph Deutsch, Zoya Nissanov and Jacques Silber

A recent trend in the study of poverty is to consider a relative poverty line, one that is responsive to the nature of the income distribution. We develop an axiomatic…

Abstract

A recent trend in the study of poverty is to consider a relative poverty line, one that is responsive to the nature of the income distribution. We develop an axiomatic approach to the determination of an amalgam poverty line. Given a reference income (e.g., the mean or the median), the amalgam poverty line becomes a weighted average of the absolute poverty line and the reference income, where the weights depend on the policy maker’s preferences for aggregating the two components. The paper ends with an empirical illustration comparing urban and rural areas in the People’s Republic of China and India.

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Inequality after the 20th Century: Papers from the Sixth ECINEQ Meeting
Type: Book
ISBN: 978-1-78560-993-0

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Book part
Publication date: 23 May 2007

Jean-Yves Duclos and Paul Makdissi

This paper develops criteria for an alternative concept of inequality dominance and shows how they relate to criteria for comparing relative poverty. The results warn…

Abstract

This paper develops criteria for an alternative concept of inequality dominance and shows how they relate to criteria for comparing relative poverty. The results warn inter alia against the use of some popular indices of inequality. They do, however, provide an ethical basis for the use of other popular indices of (restricted) inequality as potential relative poverty indices. The results also suggest an interesting extension of the Schutz coefficient as well as a use of Lorenz curves for the analysis of relative poverty and restricted inequality. A graphical illustration shows how the new criteria of restricted inequality dominance extend the ranking power of previously proposed inequality dominance criteria.

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Inequality and Poverty
Type: Book
ISBN: 978-0-7623-1374-7

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Book part
Publication date: 28 December 2018

Claudio Zoli

We investigate the relationship between the notion of progressive taxation and inequality reduction under a general version of the concept of inequality equivalence. We…

Abstract

We investigate the relationship between the notion of progressive taxation and inequality reduction under a general version of the concept of inequality equivalence. We consider a two-parameter formalization of the concept of inequality equivalence that both includes, as special cases, the intermediate inequality equivalence and the path-independent/unit-consistent inequality equivalence. Both criteria could range from relative to absolute inequality views as the parameters in the formulation change. For the path-independent/unit-consistent inequality equivalence the condition of nondecreasing average tax rate is necessary and sufficient to guarantee the inequality-reducing effect of taxation for all the inequality views in between the relative and the absolute.

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Inequality, Taxation and Intergenerational Transmission
Type: Book
ISBN: 978-1-78756-458-9

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Book part
Publication date: 15 December 2004

Buhong Zheng

This paper examines the notion of intermediate inequality and its measurement. Specifically, we investigate whether the intermediateness of an intermediate measure can be…

Abstract

This paper examines the notion of intermediate inequality and its measurement. Specifically, we investigate whether the intermediateness of an intermediate measure can be preserved through repeated (affine) inequality-neutral income transformation. For all existent intermediate measures of inequality, we show that the intermediateness cannot be preserved through the transformation; each intermediate measure tends to either a relative measure or an absolute measure. This observation is then generalized to the class of unit-consistent inequality measures. An inequality measure is unit-consistent if inequality rankings by the measure are not affected by the measuring units in which incomes are expressed. We show that the unit-consistent class of intermediate measure of inequality consists of generalizations of an existent intermediate measure and, hence, the intermediateness also cannot be retained in the limit through transformations.

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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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Article
Publication date: 8 November 2011

Kenneth Poon and Alfons Weersink

The purpose of this paper is to examine the factors affecting the relative variability in farm and off‐farm income for Canadian farm operators.

Abstract

Purpose

The purpose of this paper is to examine the factors affecting the relative variability in farm and off‐farm income for Canadian farm operators.

Design/methodology/approach

Variability of farm and off‐farm income is analyzed using a dataset of 17,000 farm operators from 2001 to 2006. Relative ranking of the coefficients of variation (CV) for farm and off‐farm income are compared across farm types and are regressed against factors conditioning the variations.

Findings

Greater reliance on farm income results in lower (greater) relative variability in farm (off‐farm) income. Larger commercial operations experience larger farm income volatility because they are less risk averse or they can manage more risk. Diversification and off‐farm employment appear to be risk management strategies for commercial operations.

Research limitations/implications

Government payments have a small, positive effect on farm and off‐farm income variability, indicating this support leads farmers to take on more risky activities and/or reduce the use of self‐insurance activities. Results could also be due to the lag between the time of the income reduction and the time in which the aid is received. Further research is necessary to decipher the effects of government support on farm decisions.

Practical implications

The results on relative variation in the farm and off‐farm income across farm type raises questions about whether government programs should target specific operations.

Originality/value

While income variation remains a focus of public policy, factors affecting its variability are not well‐understood. Studies have examined the level of farm income and the decision to participate in off‐farm employment but none has examined the variance in both income sources.

Details

Agricultural Finance Review, vol. 71 no. 3
Type: Research Article
ISSN: 0002-1466

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