Does income inequality lead to banking crises in developing countries? Empirical evidence from cross-country panel data

Recent comparative inequality studies have addressed not only income but also other dimensions such as education and health inequality. Education has been believed to play a critical role in the nexus of inequality and growth. This study examines whether education distribution has an effect on income inequality. It empirically analyzes the relationship between education inequality and income inequality using quinquennial panel data from 100 countries for 1960-2000. The results show that education inequality and income inequality have a nonlinear, inverted-U-shaped relationship. This relationship appeared more consistently in developing countries. These findings suggest that educational opportunities should be more equally provided for better income distribution, especially in developing countries.

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The effects of debt restructurings on income inequality in the developing world

European Journal of International Relations ◽

10.1177/13540661211001425 ◽

2021 ◽

pp. 135406612110014

Author(s):

Glen Biglaiser ◽

Ronald J. McGauvran

Keyword(s):

Developing Countries ◽

Panel Data ◽

Income Inequality ◽

Income Distribution ◽

Government Spending ◽

Tax Reform ◽

Social Spending ◽

The Poor ◽

The Rich ◽

The Impact

Developing countries, saddled with debts, often prefer investors absorb losses through debt restructurings. By not making full repayments, debtor governments could increase social spending, serving poorer constituents, and, in turn, lowering income inequality. Alternatively, debtor governments could reduce taxes and cut government spending, bolstering the assets of the rich at the expense of the poor. Using panel data for 71 developing countries from 1986 to 2016, we assess the effects of debt restructurings on societal income distribution. Specifically, we study the impact of debt restructurings on social spending, tax reform, and income inequality. We find that countries receiving debt restructurings tend to use their newly acquired economic flexibility to reduce taxes and lower social spending, worsening income inequality. The results are also robust to different model specifications. Our study contributes to the globalization and the poor debate, suggesting the economic harm caused to the less well-off following debt restructurings.

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How do Poverty and Income Inequality affect Economic Growth in Developing Countries?

Review of Applied Management and Social Sciences ◽

10.47067/ramss.v4i2.155 ◽

2021 ◽

Vol 4 (2) ◽

pp. 547-558

Author(s):

Hamza Saleem ◽

Fatima Farooq ◽

Muhammad Aurmaghan

Keyword(s):

Economic Growth ◽

Developing Countries ◽

Panel Data ◽

Income Inequality ◽

Negative Impact ◽

Positive Impact ◽

Development Indicators ◽

The Relationship ◽

Positive Effect ◽

World Development

The major objective of this research is to examine the relationship between poverty, income inequality and economic growth from some selected developing countries. This study uses panel data for the period of 2002-2015. All the data is taken from world development indicators (WDI). To find out the results, we have used Hausman test an econometrics technique for panel data in this research. The results of the study indicate that poverty and income inequality have a negative impact on economic growth on the other hand Gross capital formation, labor force, total population and government consumption and expenditure have a positive impact on economic growth. The result tells us that changes in these variables have a significant and positive effect on the dependent variable. To achieve the goal of economic growth developing countries should reduce poverty and take meaningful steps to overcome the problem of inequality in the society which can be very helpful in achieving the goal of economic growth.

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Why Does Misallocation Persist?

American Economic Journal Macroeconomics ◽

10.1257/mac.2.1.189 ◽

2010 ◽

Vol 2 (1) ◽

pp. 189-206 ◽

Cited By ~ 66

Author(s):

Abhijit V. Banerjee ◽

Benjamin Moll

Keyword(s):

Developing Countries ◽

Simple Model ◽

Empirical Evidence ◽

Capital Accumulation ◽

Credit Constraints ◽

Extensive Margin ◽

Capital Misallocation ◽

Cross Country ◽

General Conditions

Recent papers argue that the misallocation of resources can explain large cross-country TFP differences. This argument is underpinned by empirical evidence documenting substantial dispersion in the marginal products of resources, particularly capital, in developing countries. But why does misallocation persists? That is, why don't distortions disappear on their own? This is particularly true for capital misallocation, a point we illustrate in a simple model of capital accumulation with credit constraints. We distinguish between misallocation on the intensive and the extensive margin, and show that the former should disappear asymptotically under general conditions, while the latter may persist. We conclude by discussing possible theories of persistent misallocation. (JEL D24, E22, G31, G32, L26)

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The impacts of sector growth and monetary policy on income inequality in developing countries

Journal of Economic Studies ◽

10.1108/jes-08-2017-0243 ◽

2019 ◽

Vol 46 (3) ◽

pp. 591-610 ◽

Cited By ~ 2

Author(s):

Sima Siami-Namini ◽

Darren Hudson

Keyword(s):

Economic Growth ◽

Developing Countries ◽

Monetary Policy ◽

Panel Data ◽

Income Inequality ◽

Nonlinear Effect ◽

Service Sector ◽

Functional Form ◽

Content Type ◽

The Relationship

PurposeThe purpose of this paper is to explore the effect of growth in different sectors of the economy of developing countries on income inequality and analyze how inflation, as a proxy for monetary policy, makes a proportionate contribution for setting a binding national target for reducing income inequality. The paper examines the existence of a linear or nonlinear effect of inflation and sectoral economic growth on income inequality using a balanced panel data of 92 developing countries for the period of 1990–2014.Design/methodology/approachMethods section includes several steps as below: first, the functional form of the model using panel data for investigating the contribution of economic sectors in income inequality; second, to estimate the relationship between income inequality and sector growth: testing the Kuznets hypothesis; third, to estimate the relationship between inflation and income inequality base on general functional form of the model proposed by Amornthum (2004); fourth, a panel Granger causality analysis based on a VECM approach.FindingsThe statistically significant finding shows that first agricultural growth and then industrial growth have a dominate impact in reducing income inequality in our sample. But, the service sector growth has positive effects. The results confirm the existence of Kuznets inverted “U” hypothesis for industry growth and Kuznets “U” hypothesis for service sector growth. The findings show that sector growth and inflation affect income inequality in the long-run.Originality/valueThis research is an original paper which analyzes the effect of growth in different sectors of the economy of developing countries (agriculture, manufacturing and services sectors) on income inequality and test the Kuznets hypothesis in terms of sector growth and at the same time, examine the existence of a linear/nonlinear effect of inflation and sectoral economic growth on income inequality and test Granger causality relationship between income inequality and sector growth and inflation.

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Measuring Untapped Revenue Potential in Developing Countries: Cross-Country Frontier and Panel Data Analysis

10.1596/1813-9450-9776 ◽

2021 ◽

Author(s):

Zeljko Bogetic ◽

Dominik Naeher ◽

Raghavan Narayanan

Keyword(s):

Developing Countries ◽

Data Analysis ◽

Panel Data ◽

Panel Data Analysis ◽

Cross Country

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THE IMPACTS OF GLOBALIZATION ON THE LABOR SHARE: EVIDENCE FROM ASIA

The Singapore Economic Review ◽

10.1142/s0217590820440038 ◽

2020 ◽

Vol 65 (supp01) ◽

pp. 57-73

Author(s):

XIAOSHAN HU ◽

GUANGHUA WAN ◽

JING WANG

Keyword(s):

Developing Countries ◽

Panel Data ◽

Income Inequality ◽

World Wide ◽

Trade Openness ◽

Labor Income ◽

Significant Determinant ◽

Outward Fdi ◽

Labor Share ◽

The Impact

The decline in the share of labor income — an indicator of functional income distribution — has contributed to rising income inequality world-wide. Despite a growing literature, little is known about the effects of globalization on the labor share or inequality in Asia where some of the economies are most globalized. Applying fixed-effect regressions to panel data from 29 Asian economies over the period from 1980 to 2014, we focus on the impacts of globalization on the labor share in Asia where globalization is measured by trade openness and FDI. The modeling results show that trade openness is a significant determinant of the labor share. More specifically, the impact of export is significantly negative and the impact of import is positive. In terms of FDI, the coefficient of the inward FDI is significantly positive and that of the outward FDI is significantly negative in developing countries only.

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