Direct and Indirect Effects of Income Inequality On Economic Growth Through Political Economy

2019 ◽  
pp. 5-17
Author(s):  
Goksu Aslan
Keyword(s):  
Economic Growth ◽  
Political Economy ◽  
Income Inequality ◽  
Indirect Effects ◽  
Direct Effects ◽  
Negative Effects ◽  
Transmission Channels ◽  
Interaction Terms ◽  
The Impact ◽  
Different Levels

In addition to its direct effects, income inequality may affect economic growth indirectly through various transmission channels. Negative effects may arise from a political economy, socio-political instability, and credit market imperfections. In other words, inequality may have indirect effects on economic growth through these transmission channels. In this article, the focus is on testing the impact of income inequality through the political economy channel, using several types of taxes as the proxy for redistributive pressure. In order to test the possible effects through these channels, income inequality, taxation, and related interaction terms are added into the growth model. The results show that there is a significant negative interaction between income inequality and tax channels. This interaction is also justified with the tax index calculated by the PCA. Marginal effects of the related tax channels are interpreted for different levels of income inequality.

scholarly journals Financial Inclusion, Income Inequality and Sustainable Economic Growth in Sub-Saharan African Countries

2021 ◽  
Vol 13 (4) ◽  
pp. 1780
Author(s):  
Chima M. Menyelim ◽  
Abiola A. Babajide ◽  
Alexander E. Omankhanlen ◽  
Benjamin I. Ehikioya
Keyword(s):  
Economic Growth ◽  
Income Inequality ◽  
Financial Services ◽  
Sub Saharan Africa ◽  
Kuznets Curve ◽  
African Countries ◽  
Financial Access ◽  
Sub Saharan ◽  
Sustainable Economic Growth ◽  
The Impact

This study evaluates the relevance of inclusive financial access in moderating the effect of income inequality on economic growth in 48 countries in Sub-Saharan Africa (SSA) for the period 1995 to 2017. The findings using the Generalised Method of Moments (sys-GMM) technique show that inclusive financial access contributes to reducing inequality in the short run, contrary to the Kuznets curve. The result reveals a negative effect of financial access on the relationship between income inequality and economic growth. There is a positive net effect of inclusive financial access in moderating the impact of income inequality on economic growth. Given the need to achieve the Sustainable Development Targets in the sub-region, policymakers and other stakeholders of the economy must design policies and programmes that would enhance access to financial services as an essential mechanism to reduce income disparity and enhance sustainable economic growth.

scholarly journals Effectiveness of Three Post-Harvest Rehabilitation Treatments for Runoff and Sediment Reduction on Skid Trails in the Hyrcanian Forests

2020 ◽  
Vol 41 (2) ◽  
pp. 309-324
Author(s):  
Meghdad Jourgholami ◽  
Masoumeh Ahmadi ◽  
Farzam Tavankar ◽  
Rodolfo Picchio
Keyword(s):  
Leaf Litter ◽  
Sediment Yield ◽  
Rainfall Intensity ◽  
Regression Equations ◽  
Negative Effects ◽  
Diverse Range ◽  
Straw Mulch ◽  
The Impact ◽  
Different Levels ◽  
Runoff And Sediment Yield

Ground-based skidding operations can lead to soil compaction and displacement, which could cause negative effects on forest soil. Hence, some efforts such as forestry best management practices (BMPs) must be implemented in the prone area to mitigate these possible impacts. Several materials and treatments have been adopted to suppress these adverse effects by increasing the ground cover. However, the effects of mulch treatments on runoff and sediment yield are inconclusive with a diverse range of effectiveness. For these reasons, in this research mulch treatments were tested as to determine how the application of organic mulch amendments such as straw and leaf litter and contour-felled logs would alleviate the runoff and sediment yield on machine operating trails and ensure successful hillslope stabilization. The aims of the study were to analyse and compare the effectiveness of leaf litter (LM) and straw mulch (SM) rate and different distances of contour-felled logs (CFL) to mitigate the runoff and sediment yield, and examine the impact of rainfall intensity on effectiveness of litter mulch, straw mulch, and contour-felled logs. Totally, 30 bounded runoff plots in the machine operating trails and four treatments including litter mulch (LMR1: 0.62, LMR2: 1.24, and LMR3: 1.86 kg m-2), straw mulch (SMR1: 0.45, SMR2: 0.92, and SMR3: 1.34 kg m-2), contour-felled logs (CFL10: 10, CFL20: 20, and CFL30: 30 m), and untreated area were established in triplicate with 4 m width and 100 m length. During the study period, the runoff and sediment yield in the untreated trails (U) were 2.36 mm and 11.84 g m-2. Straw (from 41.5 to 60.6%) and litter mulch (from 38.1 to 55.1%), and contour-felled logs treatments (from 70.8 to 88.1%) significantly decreased the runoff, compared to U treatment. Results show that mulch treatments with three different levels of Litter Mulch Rate, LMR1, LMR2, and LMR3 decreased mean sediment by 46.6, 64.0 and 71.8%, in the treatments with three different levels of Straw Mulch Rate, SMR1, SMR2, and SMR3 decreased mean sediment by 42.9, 62.1, and 69.9%, and in the treatments with three different distances of Contour-Felled Logs, CFL10, CFL20, and CFL30 decreased mean sediment by 90.6, 94.7 and 88.3% comparing to U, respectively. The relationships of the runoff and sediment responses to increasing mulching rate of litter and straw followed as negative logarithmic curves, but the decreasing-increasing trends were observed in runoff and sediment yield as the distance between contour-felled logs increased from 10 to 30 m. Polynomial regression equations were developed for predicting the runoff and sediment yield as a function of the application rate of litter and straw mulch and the distance between contour-felled logs, and rainfall intensity. We concluded that contour-felled logs treatment was more effective than both litter and straw mulch to mitigate the runoff, runoff coefficient, and sediment yield on machine operating trails. As a management measure, it could be possible to propose that the contour-felled logs with a distance of 20 m be prescribed to protect the machine operating trails from the negative effects of surface waterflow.

Contingent Democrats: Industrialists, Labor, and Democratization in Late-Developing Countries

2000 ◽  
Vol 52 (2) ◽  
pp. 175-205 ◽  
Author(s):  
Eva Bellin
Keyword(s):  
Economic Growth ◽  
International Economic ◽  
Political Economy ◽  
Developing Countries ◽  
Economic Integration ◽  
State Dependence ◽  
Late Development ◽  
Welfare Policies ◽  
Support For Democracy ◽  
The Impact

Many classic works of political economy have identified capital and labor as the champions of democratization during the first wave of transition. By contrast, this article argues for the contingent nature of capital and labor's support for democracy, especially in the context of late development. The article offers a theory of democratic contingency, proposing that a few variables, namely, state dependence, aristocratic privilege, and social fear account for much of the variation found in class support for democratization both across and within cases. Conditions associated with late development make capital and labor especially prone to diffidence about democratization. But such diffidence is subject to change, especially under the impact of international economic integration, poverty-reducing social welfare policies, and economic growth that is widely shared. Case material from Korea, Indonesia, Mexico, Zambia, Brazil, Tunisia and other countries is offered as evidence.

Estimated impact of COVID-19 on the Jordanian economy

2021 ◽  
Vol 5 (3) ◽  
pp. 34-41
Author(s):  
Jameel Aljaloudi
Keyword(s):  
Economic Growth ◽  
Unemployment Rate ◽  
Public Debt ◽  
Budget Deficit ◽  
International Institutions ◽  
Economic Downturn ◽  
International Labor Organization ◽  
Negative Effects ◽  
Poverty And Inequality ◽  
The Impact

This study aims to estimate the negative effects of COVID-19 on the Jordanian economy. These effects are expected to coincide with the results of studies carried out by international institutions. For example, the International Labor Organization (ILO) estimated indicate an increase in the number of unemployed to 5.3 million (the “low” scenario) and 24.7 million (the “high” scenario), from a baseline of 188 million in 2019 (ILO, 2020a). Experts from the World Bank and the International Monetary Fund (IMF) confirmed that the global economic downturn (caused by the coronavirus pandemic) is the largest in the past eight decades, which will lead to an increase in poverty and inequality and harm economic growth in the long term. (News 18, 2020). To measure the impact of COVID-19 on the Jordanian economy, the following indicators were adopted: an economic growth, an unemployment rate, a foreign trade (imports and exports), public revenues, public spending, a public debt, and a budget deficit. The study relied on data contained in reports issued by international institutions and official institutions in Jordan. The results indicate a slowdown in the rate of economic growth, an increase in the unemployment rate, a decrease in exports and imports, an increase in the public debt and the budget deficit

Interest rate liberalization and economic growth nexus: does corruption matter?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Abdulhadi Aliyara Haruna ◽  
Abu Sufian Abu Bakar
Keyword(s):  
Economic Growth ◽  
Interest Rate ◽  
Positive Impact ◽  
Reform Process ◽  
Negative Effects ◽  
African Countries ◽  
Cross Sectional ◽  
Content Type ◽  
Interest Rate Liberalization ◽  
The Impact

Purpose This paper aims to examine the impact of interest rate liberalization on economic growth and the relevance of corruption in the five selected sub-Saharan African countries. Design/methodology/approach The study used the modified version of Driscoll and Kraay’s model by Hoechle, which solved the effects of cross-sectional dependence and heteroscedasticity. Findings The findings reveal a positive impact of the index on economic growth, and it was found that foreign direct investment (FDI) and credit to private sector by banks (CPSB) all stimulate economic growth. The interaction terms of corruption with FDI and CPSB indicate negative effects that show how corruption erodes the benefits of liberalization. Finally, the paper recommends the pursuit of appropriate policies with the sole aim of eradicating corruption and providing a conducive environment for business. Originality/value The paper developed a composite domestic financial liberalization index to capture the timing and essential dimensions of the reform process. The study investigates the effect of interest rate liberalization on economic growth and the relevance of corruption. Most of the recent and past studies only examined the impact of interest rate reforms on growth without investigating the relevance of corruption.

scholarly journals Corruption and satisfaction with democracy: the conditional role of electoral disproportionality and ballot control

2018 ◽  
Vol 10 (3) ◽  
pp. 393-416 ◽  
Author(s):  
Alessandro Pellegata ◽  
Vincenzo Memoli
Keyword(s):  
Electoral Systems ◽  
Aggregate Level ◽  
Negative Effects ◽  
Empirical Results ◽  
Satisfaction With Democracy ◽  
Level Data ◽  
The Impact ◽  
The Relationship ◽  
Different Levels

Existing literature has analysed the relationship between electoral systems and either corruption or satisfaction with democracy (SWD) focussing on the traditional distinction between majoritarian and proportional systems. This paper, instead, investigates if and how specific aspects of electoral systems moderate the negative effects of corruption perceptions on SWD. We argue that two mechanisms act simultaneously but at different levels. The first mechanism is the relationship between voters and the national government, while the second links single representatives to their constituents. We advance conditional hypotheses that postulate an attenuating effect of disproportionality and a reinforcing impact of personal vote. Empirical results from 35 elections in 33 democracies, using both individual and aggregate-level data, confirm the research hypotheses. More disproportional electoral systems weaken the impact of citizens’ perceived corruption on their democratic satisfaction, while this is strengthened by systems in which the ballot control is mostly in the hand of the voters.

Effect of income inequality, community infrastructure and individual stressors on adult depression

2020 ◽  
Author(s):  
Vanessa Sha Fan ◽  
Renuka Mahadevan ◽  
Janni Leung
Keyword(s):  
Income Inequality ◽  
Urban Residents ◽  
Policy Mix ◽  
Community Factors ◽  
Resource Misallocation ◽  
Women Health ◽  
City Community ◽  
Rural And Urban ◽  
The Impact ◽  
Different Levels

Abstract This paper considers the impact of variables at three different levels—city, community and individual—on the depression of adults aged 45 years and above in China. Evidence shows that community factors, such as infrastructure and elderly centres, are critical to reduce depression but the effect of city-level factors such as lowering income inequality and improving public health investment is different for the segments of poor and non-poor as well as the rural and urban residents. This highlights the need to consider targeted policy mix options to avoid resource misallocation. Lastly, Chinese females’ depression has worsened over time with ageing, particularly those who drink alcohol or are less educated are prone to depression prompting the need for specialist women health centres.

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.

Sign in / Sign up

Export Citation Format

Share Document