Stock and Labor Market Synchronization and Income Inequality: Evidence from OECD Countries

2018 ◽  
Vol 09 (01n02) ◽  
pp. 1850003
Author(s):  
Jie Li ◽  
Alice Y. Ouyang
Keyword(s):  
Labor Market ◽  
Income Inequality ◽  
Stock Market ◽  
Labor Markets ◽  
Oecd Countries ◽  
Capital Gains ◽  
Monetary Expansion ◽  
Market Participants ◽  
The Poor ◽  
The Rich

This paper formally tests how the synchronization of stock and labor markets can affect income inequality. The responsiveness of stock and labor markets to a monetary expansion is different, i.e., a stock market, in general, tends to respond much faster than labor market. When there is monetary expansion, stock market participants (usually the rich) can enjoy capital gains quicker than labor market participants (usually the poor). However, if a labor market is more synchronized with a stock market, the capital gains a rich can enjoy in a stock market would be faster matched by labor market response, leading to a shrinking income inequality. We empirically confirm the prediction with different synchronization measures, controlling endogeneity issues.

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

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.

scholarly journals Market Imperfections and Income Distribution

2016 ◽  
Vol 16 (2) ◽  
pp. 1147-1167
Author(s):  
Ensar Yılmaz
Keyword(s):  
Labor Market ◽  
Income Inequality ◽  
Income Distribution ◽  
Labor Markets ◽  
Wage Rate ◽  
Consumption Patterns ◽  
Market Imperfections ◽  
Luxury Goods ◽  
Sector Model ◽  
Two Sectors

Abstract This paper aims to search links between market imperfections and functional income distribution. For this purpose we construct a two-sector model – wage goods and luxury goods producing sectors – incorporating imperfections of the product and labor markets under income inequality. In a structure with interdependent and partially monopolistic and competitive markets, we analytically trace up the effects of the changes in power relations proxied by the degree of mark-ups in the product and labor market. The model shows that price and wage mark-ups in two sectors have crucial income distribution implications for the agents in the economy to varying extents. It also demonstrates the effect of the existence of the differentiated consumption patterns arising from income inequality on income distribution. Furthermore, it seems that unemployment level creates externalities on wage rate and on corporate taxes of firms.

scholarly journals China's Post-Socialist Inequality

2012 ◽  
Vol 111 (746) ◽  
pp. 229-234 ◽  
Author(s):  
Martin King Whyte
Keyword(s):  
Income Inequality ◽  
Sharp Increase ◽  
The Poor ◽  
The Rich

The country's sharp increase in income inequality is not the result of the rich getting richer while the poor become poorer.

REDUCING INCOME INEQUALITY WHILE BOOSTING ECONOMIC GROWTH: CAN IT BE DONE? EVIDENCE FROM OECD COUNTRIES

2014 ◽  
Vol 59 (01) ◽  
pp. 1450001 ◽  
Author(s):  
PETER HOELLER ◽  
ISABELLE JOUMARD ◽  
ISABELL KOSKE
Keyword(s):  
Economic Growth ◽  
Labor Market ◽  
Income Inequality ◽  
Oecd Countries ◽  
Gdp Per Capita ◽  
Labor Market Institutions ◽  
Policy Reforms ◽  
Market Institutions ◽  
Trade Off ◽  
Per Capita

This paper identifies inequality patterns across Organisation for Economic Co-operation and Development (OECD) countries and provides new analysis of their policy and non-policy drivers. One key finding is that education and anti-discrimination policies, well-designed labor market institutions and large and/or progressive tax and transfer systems can all reduce income inequality. On this basis, the paper identifies several policy reforms that could yield a double dividend in terms of boosting GDP per capita and reducing income inequality, and also flags other policy areas where reforms would entail a trade-off between both objectives.

Income Inequality, Life Satisfaction, and Economic Worries

2016 ◽  
Vol 8 (2) ◽  
pp. 133-141 ◽  
Author(s):  
Bettina Roth ◽  
Elisabeth Hahn ◽  
Frank M. Spinath
Keyword(s):  
Life Satisfaction ◽  
Income Inequality ◽  
Middle Class ◽  
Panel Study ◽  
National Level ◽  
Negative Relationship ◽  
Income Disparity ◽  
Negative Effects ◽  
The Poor ◽  
The Rich

We analyzed the effect of income inequality on Germans’ life satisfaction considering factors explaining the mechanism of this relationship. Based on data from the German Socio-Economic Panel Study for the years 1984 to 2012, we found a negative relationship between national-level income disparity and average life satisfaction, meaning that people felt happier in years with lower inequality. The effect was completely mediated by economic worries, which increased with rising inequality and in turn reduced people’s satisfaction. However, people’s reaction to inequality depended on their income level: Considering the direct effect of inequality, higher income disparity was clearly detrimental only for the poor and the middle class. Moreover, we found a significant mediation through economic worries for the middle class but not for the poor. The rich showed a more complex pattern of interrelations with both, positive and negative effects of inequality when controlling for economic worries.

A Comparative Study of Inequality and Corruption

2005 ◽  
Vol 70 (1) ◽  
pp. 136-157 ◽  
Author(s):  
You Jong-sung ◽  
Sanjeev Khagram
Keyword(s):  
Income Inequality ◽  
Instrumental Variables ◽  
Significant Interaction ◽  
Explanatory Power ◽  
Significant Interaction Effect ◽  
The Poor ◽  
The World ◽  
Corruption Index ◽  
The Rich ◽  
Control Of Corruption

This article argues that income inequality increases the level of corruption through material and normative mechanisms. The wealthy have both greater motivation and more opportunity to engage in corruption, whereas the poor are more vulnerable to extortion and less able to monitor and hold the rich and powerful accountable as inequality increases. Inequality also adversely affects social norms about corruption and people's beliefs about the legitimacy of rules and institutions, thereby making it easier for them to tolerate corruption as acceptable behavior. This comparative analysis of 129 countries using two-stage least squares methods with a variety of instrumental variables supports the authors' hypotheses using different measures of corruption (the World Bank's Control of Corruption Index and the Transparency International's Corruption Perceptions Index). The explanatory power of inequality is at least as important as conventionally accepted causes of corruption such as economic development. The authors also found a significant interaction effect between inequality and democracy, as well as evidence that inequality affects norms and perceptions about corruption using the World Values Surveys data. Because corruption also contributes to income inequality, societies often fall into vicious circles of inequality and corruption.

Inequality and Neighbourhood Effects

2017 ◽  
Author(s):  
Namrata Gulati ◽  
Tridip Ray
Keyword(s):  
Income Inequality ◽  
Health Care Services ◽  
Service Providers ◽  
Market Access ◽  
Consumer Surplus ◽  
Neighbourhood Effects ◽  
Care Services ◽  
The Poor ◽  
Complete Exclusion ◽  
The Rich

The key insight in our research is to recognize inequality–neighbourhood interaction: neighbourhood effects interacting with income inequality may affect poor people’s ability to access basic facilities like health-care services, schooling, and so on. While Gulati and Ray (2016) model this interaction on a monopolist service provider in a neighbourhood structured as a linear city where rich and poor consumers live side by side, in this chapter we extend the analysis to a competitive framework with free entry and exit where the natural neighbourhood structure is a circular city. We find inverted-U shape relationships between income inequality and market access and welfare of the poor: if we compare a cross-section of societies, the poor community as a whole is initially better off living in relatively richer societies, but, beyond a point, the aggregate market access and consumer surplus of the poor starts declining as society becomes richer. We identify the possibility of complete exclusion of the poor from the market: a scenario where the service providers cater only to the rich and the poor have absolutely no market access, and find that it is the higher income gap between rich and poor that exposes the poor to this unfortunate outcome.

Income Inequality in India

2019 ◽  
pp. 356-363
Author(s):  
Ngozi Bosede Adeleye ◽  
M. Abdul Jamal ◽  
M. Fakir Ismail ◽  
S. Mohamed Nazeer
Keyword(s):  
Income Inequality ◽  
Social Inequality ◽  
Economic Reforms ◽  
Agricultural Growth ◽  
Material Resources ◽  
Sustained Growth ◽  
The Poor ◽  
Or Groups ◽  
The Rich ◽  
Employment Education

Social inequality means that certain individuals or groups have more material resources than others. Poverty implies some insufficiency in the material resources of an individual or group. The exploitation of the poor by the rich can be contained by reducing the level of inequality between the rich and the poor, which in turn depends upon reducing poverty through economic reforms. If economic reforms bring about steady and sustained growth in the economy, the poor could benefit in two ways. First, experience has shown that growth (particularly the agricultural growth) trickles down to the poor. Second, sustained growth creates an environment that is, on the whole, congenial for empowerment of the poor. The dependence of the poor on the groups dominating them becomes less precarious owing to expansion of opportunities for employment, education, occupational mobility, and for achieving higher social status.

scholarly journals No Exit: Social Reproduction in an Era of Rising Income Inequality

2017 ◽  
Vol 45 (4) ◽  
pp. 471-503 ◽  
Author(s):  
Lindsay B. Flynn ◽  
Herman Mark Schwartz
Keyword(s):  
Income Inequality ◽  
Social Reproduction ◽  
Oecd Countries ◽  
Nordic Countries ◽  
The State ◽  
Generational Cohorts ◽  
Unequal Access ◽  
Political Responses ◽  
The Rich ◽  
The Way

What explains the unexpected, uneven, but unquestionably pervasive trend toward re-familialization in the rich OECD countries? The usual arguments about political responses to rising income inequality, unstable families, and unstable employment predicted that the state would increasingly shelter people against risk, producing greater individuation and de- rather than re-familialization. By contrast, we argue three things. First, re-familialization has replaced de-familialization. Second, unequal access to housing drives a large part of re-familialization. Rather than becoming more “Anglo-Nordic,” countries are becoming more “southern European” in the way that younger cohorts access housing. Third, this inequality-driven insecurity and unequal access is felt differently not only between generational cohorts but also within cohorts.

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