scholarly journals Income inequality and financialization: a not so straightforward relationship

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Constantinos Alexiou ◽  
Emmanouil Trachanas ◽  
Sofoklis Vogiazas
Keyword(s):  
Income Inequality ◽  
Gini Coefficient ◽  
Trade Unions ◽  
Fixed Effects ◽  
Credit Market ◽  
Market Regulation ◽  
Cross Sectional ◽  
Content Type ◽  
Panel Fixed Effects ◽  
The Impact

PurposeThe authors explore the impact of financialization on income inequality for a panel of 19 OECD countries over the period 2000–2017. The authors control for the effect of banking crises, credit market regulation and globalization, among other factors.Design/methodology/approachThe authors use three proxies for income inequality and four proxies for financialization. The authors employ a panel fixed effects approach using Driscoll and Kraay’s (1998) nonparametric covariance matrix estimator, which produces standard errors that are robust to general forms of cross-sectional dependence.FindingsThe authors provide evidence which to a great extent supports the view that the process of financialization has increased income inequality. In the disposable Gini specifications, two out of the four financialization measures are found to significantly contribute to rising inequality whilst in the specification with the market income Gini coefficient, three out of the four financialization proxies appear to adversely affect inequality. In the specification with the Gini coefficient based on manufacturing pay, the evidence is weak. Furthermore, trade unions appear to play a significant role in reducing inequality in two out of the three Gini specifications while the effect of credit market regulation is rather ambiguous.Originality/valueThe authors’ findings suggest a positive relationship between financialization and income inequality; however, the results depend on the proxies used to measure financialization and income inequality. The authors conclude that the process of financialization in triggering income inequality is complex and merits additional research.

scholarly journals The relationship between debt and a firm’s performance: the impact of institutional factors

2019 ◽  
Vol 45 (9) ◽  
pp. 1272-1291 ◽  
Author(s):  
Rosa Forte ◽  
José Miguel Tavares
Keyword(s):  
Fixed Effects ◽  
Negative Relationship ◽  
Research Area ◽  
Institutional Framework ◽  
Market Regulation ◽  
Fixed Effects Model ◽  
Content Type ◽  
Macroeconomic Variables ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this paper is to contribute to the existing literature on the relationship between debt and firms’ performance, by focusing on the influence of the institutional framework on this relationship and on the role of macroeconomic variables in explaining performance. Design/methodology/approach The present work is based on a large sample of 48,840 manufacturing firms from nine European countries covering the 2008–2013 period and uses a fixed effects model. Findings Results show that the impact of debt on a firm’s performance depends on the measure of debt (short-term debt positively affects a firm’s performance, whereas long-term debt presents a negative relationship) and that the institutional framework is indeed affecting the relationship between debt and a firm’s performance: the positive effect of debt on a firm’s performance tends to be higher the greater the “efficiency of the legal system” and the greater the “credit market regulation.” Macroeconomic variables also play a key role in explaining performance. Originality/value Unlike most of the existing studies, which focus only on the relationship between debt and firms’ performance in a single country, the present work uses a sample of firms from nine countries with the purpose of filling a research gap and bringing new empirical evidence to this research area.

The impact of foreign direct investment on urban-rural income inequality

2016 ◽  
Vol 8 (3) ◽  
pp. 480-497 ◽  
Author(s):  
Chunlai Chen
Keyword(s):  
Economic Growth ◽  
International Trade ◽  
Income Inequality ◽  
Fixed Effects ◽  
Knowledge Spillovers ◽  
Employment Creation ◽  
Content Type ◽  
Rural Income ◽  
Urban Rural ◽  
The Impact

Purpose The purpose of this paper is to analyse the impact of foreign direct investment (FDI) on urban-rural income inequality in China. Design/methodology/approach This study uses the provincial-level panel data and employs the fixed-effects instrumental variable regression technique to investigate empirically the impact of FDI on urban-rural income inequality in China. Findings The study finds that while FDI has directly contributed to reducing urban-rural income inequality through employment creation, knowledge spillovers and contribution to economic growth, FDI has also contributed to increasing urban-rural income inequality through international trade. Practical implications The study has some policy implications. First, as the study finds that FDI not only contributes to reducing urban-rural income inequality through employment creation, knowledge spillovers and contribution to economic growth, but also contributes to increasing urban-rural income inequality through international trade, therefore, apart from improving local economic and technological conditions to attract more FDI inflows, China should re-design FDI policies by shifting away from encouraging export-oriented FDI to encouraging FDI flows into the industries and sectors in line with China’s overall economic structural adjustments and industrial upgrading. Second, policies should focus on increasing investment in infrastructure development and in public education, which not only can reduce urban-rural income inequality but also can attract more FDI inflows. And finally policies should be designed to accelerate urbanisation development by focusing on urban-rural integrated development, household registration system reform and proper settlement of rural migrants in urban areas, thus reducing urban-rural income inequality. Originality/value The paper makes two major contributions to the literature. First, the paper adopts the fixed-effects instrumental variable regression technique to deal with the endogeneity issues in estimating the impact of FDI on urban-rural income inequality, producing more consistent estimates. Second, the paper investigates not only the direct impact of FDI on urban-rural income inequality through the effects of employment creation, knowledge spillovers and contribution to economic growth, but also the indirect impact of FDI on urban-rural income inequality through its activities in international trade, adding new empirical evidence to the sparse literature on the impact of FDI on income inequality in China.

Employee mistreatment and information asymmetry

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Omer Unsal
Keyword(s):  
Information Asymmetry ◽  
Fixed Effects ◽  
Small Firms ◽  
Information Environment ◽  
Employee Relations ◽  
Content Type ◽  
Equity Risk ◽  
Panel Fixed Effects ◽  
High Level ◽  
The Impact

PurposeIn this paper, the author utilizes a unique hand-collected dataset of workplace lawsuits, violations and allegations to test the relation between employee mistreatment and information asymmetry.Design/methodology/approachThe author tests the impact of employee treatment on firms' information environment by utilizing the S&P 1500 firms of 17,663 firm-year observations, which include 2,992 unique firms and 5,987 unique CEOs between 2000 and 2016. These methods include panel fixed effects, as well as alternative measures of information asymmetry, event study and matched samples for further robustness tests.FindingsThe author finds that employee disputes exacerbate the information flow between insiders and outsiders. Further, the author reports that case characteristics, such as case outcome and case duration, aggravate that problem. The author documents that the positive relationship between employee mistreatment and information asymmetry is stronger for small firms and firms with smaller market power, as well as firms with a high level of equity risk.Originality/valueThis study is the first to investigate how employee relations influence a firm's information asymmetry. The author aims to contribute to the literature by studying (1) the relation between information asymmetry and employee mistreatment, (2) how firm characteristics affect the path from employee disputes to information asymmetry and (3) the influence of various other types of evidence of employee mistreatment beyond litigation on the information environment.

scholarly journals The labor share and income inequality: some empirical evidence for the period 1990-2015

2020 ◽  
Vol 28 (84) ◽  
pp. 173-195
Author(s):  
Iñaki Erauskin
Keyword(s):  
Labor Market ◽  
Panel Data ◽  
Income Inequality ◽  
Gini Coefficient ◽  
Content Type ◽  
Labor Share ◽  
Income Share ◽  
The Gini Coefficient ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this paper is to analyze empirically the relationship between the labor share and income inequality, as measured by the Gini coefficient and by the income shares for different quintiles, during the period 1990–2015 for 62 developed and developing countries. Design/methodology/approach This study uses panel data techniques to analyze empirically the relationship between the labor share and income inequality. Findings This paper finds that a lower labor share is associated with a higher Gini coefficient. A lower labor share is found to be strongly associated with a smaller income share for the lowest two quintiles and larger income share for the highest quintile and weakly associated with a smaller income share for the third and fourth quintiles. Moreover, this paper finds that the lower the quintile, the stronger the impact of the labor share on the income share of the quintile. Social implications Policymakers should take into account the evolution of the labor share. Public policies that improve labor market outcomes, such as those aimed to promote participation in the labor market and strengthen the human capital of low-income groups, seem necessary to prevent the rise in economic inequalities. Moreover, as the digital transformation of society progresses, policies to promote skill deepening may have an important role in reversing excessive inequalities. Originality/value How changes in the labor share are associated with changes in the Gini coefficient, and how this is driven by income shares for different quintiles, for a broad range of countries during the most recent period, has not been comprehensively studied using panel data techniques.

scholarly journals The impact of income inequality on rental affordability: An empirical study in large American metropolitan areas

Urban Studies ◽  
2017 ◽  
Vol 55 (10) ◽  
pp. 2106-2122 ◽  
Author(s):  
Hongwei Dong
Keyword(s):  
Income Inequality ◽  
Low Income ◽  
Gini Coefficient ◽  
Metropolitan Areas ◽  
County Level ◽  
Longitudinal Analyses ◽  
Cross Sectional ◽  
The Past ◽  
Percentage Points ◽  
The Impact

American metropolitan areas have experienced rising income inequality and worsening rental affordability in the past few decades. Has the rise of inequality caused worsening rental affordability? This study conducts both cross-sectional and longitudinal analyses to examine the impact of income inequality on rental affordability for low-income tenant households at the county level in America’s largest 100 metropolitan areas. The cross-sectional analyses reveal that, everything else equal, an increase of Gini coefficient by 0.1 in a county was associated with 2.2 and 4.4 percentage points more severely rent-burdened low-income households in 2000 and 2008–2012, respectively. The longitudinal analyses confirm that rising income inequality caused worsening rental affordability for low-income tenant households in large American metropolitan areas between 2000 and 2008–2012. On average, counties that experienced a 0.1 greater increase in Gini coefficient from 2000 to 2008–2012 saw faster growth of severely rent-burdened low-income tenant households by 2.9 percentage points.

Impact of credit market conditions on agriculture productivity in Sub-Saharan Africa

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mohammed Shuaibu ◽  
Mamello Nchake
Keyword(s):  
Credit Market ◽  
Financial Education ◽  
Least Square ◽  
Sub Saharan Africa ◽  
Alternative Measure ◽  
Market Conditions ◽  
Cross Sectional ◽  
Content Type ◽  
Sub Saharan ◽  
The Impact

PurposeThis study conducts an empirical analysis of the relationship between credit market conditions and agriculture output in Sub-Saharan Africa.Design/methodology/approachThis paper uses a two-stage least square instrumental variable and difference generalised method of moments dynamic panel model because potential reverse causation and endogeneity are addressed.FindingsThe findings show that better credit market conditions contribute to agriculture productivity. The results also show that better infrastructure and availability of agriculture inputs are associated with productivity improvements. The empirical results are robust when an alternative measure of agriculture productivity is used.Research limitations/implicationsAn important research agenda for future studies will be to consider alternative measures of credit market conditions and other intervening variables that influence the nexus. Besides, other methods that account for cross-sectional dependence could also be considered as the impact of credit on agriculture varies across the sub-regions.Practical implicationsThe findings make a case for enhancing credit market access to boost agriculture productivity. There is also a need to implement financial education programs for farmers and ensuring continuous engagement with farmers.Originality/valueAlthough the issue of agriculture finance has been well documented in the literature, few studies have estimated the elasticity of agriculture productivity to changes in credit conditions. Also, our consideration of the intervening role of infrastructure amongst others is an area that has remained relatively unexplored.

scholarly journals Women in the boardroom and their impact on climate change related disclosure

2017 ◽  
Vol 13 (4) ◽  
pp. 828-855 ◽  
Author(s):  
Mohammed Hossain ◽  
Omar Al Farooque ◽  
Mahmood Ahmed Momin ◽  
Obaid Almotairy
Keyword(s):  
Fixed Effects ◽  
Carbon Emission ◽  
Gender Diversity ◽  
Data Availability ◽  
Global Perspective ◽  
Women Directors ◽  
Board Size ◽  
Cross Sectional ◽  
Content Type ◽  
The Impact

Purpose This paper aims to investigate the relationship between gender diversity and the Carbon Disclosure Project (CDP) score/index. Specifically, the study describes extant research on theoretical perspectives, and the impact of women on corporate boards (WOBs) on carbon emission issues in the global perspective. Design/methodology/approach This study uses the carbon disclosure scores of the CDP from 2011 to 2013 (inclusive). A total observation for the three-year periods is 1,175 companies. However, based on data availability for the model, the sample size totals 331 companies in 33 countries with firms in 12 geographical locations. The authors used a model which is estimated using the fixed-effects estimator. Findings The outcomes of the study reveal that there is a positive relationship between gender diversity (WOB) and carbon disclosure information. In addition to establishing a relationship between CDP score and other control variables, this study also found a relationship with Board size, asset size, energy consumption and Tobin’s Q, which is common in the existing literature. Research limitations/implications The limitations of the study mostly revolve around samples and the time period. To further test the generalizability and cross-sectional validity of the outcomes, it is suggested that the proposed framework be tested in more socially responsible firms. Practical implications There are increasing pressures for WOBs from diverse stakeholders, such as the European Commission, national governments, politicians, employer lobby groups, shareholders, Fortune and Financial Times Stock Exchange (FTSE) rankings and best places for women to work lists. The study offers insights to policy makers implementing gender quota legislation. Originality/value The study has important implications for putting into practice good corporate governance and, in particular, gender diversity. The outcomes of the analyses advocate that companies that included women directors and had a smaller board size may expect to achieve a higher level of carbon emission performance and to voluntarily disclose the level of carbon information assessment requested by the CDP.

How is managerial remuneration determined in India?

2017 ◽  
Vol 7 (2) ◽  
pp. 154-172 ◽  
Author(s):  
Lakhwinder Singh Kang ◽  
Payal Nanda
Keyword(s):  
Performance Measures ◽  
Fixed Effects ◽  
Governance Structure ◽  
Panel Regression ◽  
Company Performance ◽  
Cross Sectional ◽  
Content Type ◽  
Accounting Performance ◽  
Fixed Effects Panel Regression ◽  
The Impact

Purpose The purpose of this paper is to analyse the impact of company performance, governance structure and ownership structure in determining the managerial remuneration for 134 listed companies in India over the years 2003-2012. Design/methodology/approach Remuneration paid to the board of directors of companies is taken to represent the managerial remuneration. Exogeneity among the company performance measures is verified with the endogtest suggested in Baum et al. (2007). A fixed effects panel regression with clustered standard errors is employed after checking for the presence of heteroskedasticity, autocorrelation and cross-sectional dependence in the data. Findings The study reveals that managerial remuneration increases as the accounting performance of companies improves, whereas the market performance of companies has no significant association with managerial remuneration. The study also shows that foreign institutional shareholding is significantly and positively related with managerial remuneration in India. Research limitations/implications This study highlights the various factors which affect the determination of managerial remuneration in India. These findings can be used as inputs by regulatory authorities in framing and improving governance norms regarding managerial remuneration. This study also suggests that factors other than the number, the independence and objectivity of independent directors are more important in determining managerial remuneration. Originality/value The present study proposes more reliable results, obtained through a fixed effects panel regression model with clustered standard error estimates and also checks endogeneity of performance measures with the endogtest, which is the appropriate test to use for verifying endogeneity in panel data.

scholarly journals Cultural and Creative Cities and Regional Economic Efficiency: Context Conditions as Catalyzers of Cultural Vibrancy and Creative Economy

2021 ◽  
Vol 13 (13) ◽  
pp. 7150
Author(s):  
Silvia Cerisola ◽  
Elisa Panzera
Keyword(s):  
Fixed Effects ◽  
Local Context ◽  
Creative Economy ◽  
Fixed Effects Model ◽  
Creative Cities ◽  
Economic Output ◽  
Innovative Methodology ◽  
Holistic Conception ◽  
Panel Fixed Effects ◽  
The Impact

Following the hype that has been given to culture and creativity as triggers and enhancers of local economic performance in the last 20 years, this work originally contributes to the literature with the objective of assessing the impact of cultural and creative cities (CCCs) on the economic output of their regions. In this sense, the cultural and creative character of cities is considered a strategic strength and opportunity that can spillover, favoring the economic system of the entire regions in which the cities are located. Through an innovative methodology that exploits a regional production function estimated by a panel fixed effects model, the effect of cities’ cultural vibrancy and creative economy on the output of their regions is econometrically explored. The data source is the Cultural and Creative Cities Monitor (CCCM) provided by the JRC, which also allows the investigation of the possible role played by the enabling environment in catalyzing the action of cultural vibrancy and creative economy. The results are thoroughly examined: especially through cultural vibrancy, CCCs strategically support the output of their region. This is particularly the case when local context conditions—such as human capital and education, openness, tolerance and trust, and quality of governance—catalyze their effect. Overall, CCCs contribute to feeding a long-term self-supporting system, interpreted according to a holistic conception that includes economic, social, cultural, and environmental domains.

Farm wages and public works

2015 ◽  
Vol 8 (1) ◽  
pp. 19-72 ◽  
Author(s):  
Kanika Mahajan
Keyword(s):  
Theoretical Model ◽  
Wage Rate ◽  
Fixed Effects ◽  
Positive Impact ◽  
Wage Growth ◽  
State Level ◽  
Random Allocation ◽  
Farm Sector ◽  
Content Type ◽  
The Impact

Purpose – The purpose of this paper is to examine the impact of National Rural Employment Guarantee Scheme (NREGS) on farm sector wage rate. This identification strategy rests on the assumption that all districts across India would have had similar wage trends in the absence of the program. The author argues that this assumption may not be true due to non-random allocation of districts to the program’s three phases across states and different economic growth paths of the states post the implementation of NREGS. Design/methodology/approach – To control for overall macroeconomic trends, the author allows for state-level time fixed effects to capture the differences in growth trajectories across districts due to changing economic landscape in the parent-state over time. The author also estimates the expected farm sector wage growth due to the increased public work employment provision using a theoretical model. Findings – The results, contrary to the existing studies, do not find support for a significantly positive impact of NREGS treatment on private cultivation wage rate. The theoretical model also shows that an increase in public employment work days explains very little of the total growth in cultivation wage post 2004. Originality/value – This paper looks specifically at farm sector wage growth and the possible impact of NREGS on it, accounting for state specific factors in shaping farm wages. Theoretical estimates are presented to overcome econometric limitations.

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