The Effect of Anticipated and Unanticipated Inflation on Income Distribution: The Israeli Case

1995 ◽  
Author(s):  
J. Silber ◽  
B.Z. Zilderfarb
Keyword(s):  
Income Distribution ◽  
Lower Half ◽  
Distributional Effects ◽  
Income Share ◽  
Macroeconomic Conditions ◽  
Empirical Results ◽  
Expected Inflation ◽  
Unanticipated Inflation ◽  
Unexpected Inflation

This paper examines the distributional effects of inflation and unemployment in Israel. Unlike previous studies, it distinguishes between the effect of expected and unexpected inflation, arguing that the latter should have a stronger effect. The empirical results show that a deterioration in macroeconomic conditions (a rise in inflation and/or unemployment) reduces the income share of the lower half of Israeli households and increases the income share of the wealthiest 20 per cent. The effect of unanticipated inflation is found, indeed, to be 67 per cent stronger than that of expected inflation.

An Empirical Investigation of the income share of the middle class

2019 ◽  
pp. 50-65
Author(s):  
Francesco Farina ◽  
Chiara Assunta Ricci
Keyword(s):  
Middle Class ◽  
Income Distribution ◽  
Income Group ◽  
Reverse Causality ◽  
Middle Income ◽  
Income Share ◽  
Redistributive Policies ◽  
Directional Relation ◽  
Middle Income Group ◽  
Income Dispersion

The scientific evaluation of the relationship between growth, redistribution, and the income share of the middle class is still in its infancy. This article aims to investigate how the drivers of economic growth impinge on market income distribution and how the middle class has a role in deciding the level of redistribution. Our strategy is to dodge the reverse causality problem, stemming from the bi-directional relation between income distribution and growth, by exploiting the peculiar feature of different indicators of income dispersion focused on the middle income group. The findings reveal that market forces and redistributive policies are both pivotal in shaping the evolution of income dispersion and in particular the income share of the middle class, over the growth process. The ability of redistributive policies to counteract the ongoing increase in income inequality seems to depend not only on the political pressure exerted by an impoverishing median voter but also on the expansion of fiscal revenues after sustained Gross Domestic Product (GDP) growth.

Verteilungswirkungen von Umweltsteuern. Konzeptionelle Überlegungen und einige empirische Ergebnisse / Distributional Effects of Eco Taxes. Concepts and Empirical Results

1994 ◽  
Vol 213 (6) ◽  
Author(s):  
Uwe Hochmuth ◽  
Rudi Kurz
Keyword(s):  
Distributional Effects ◽  
Empirical Results

ZusammenfassungUmweltprobleme sind immer zugleich auch Probleme der Verteilung. Dieser Sichtweise wurde in der Diskussion um Umweltsteuern in der Vergangenheit zu wenig Bedeutung beigemessen. Es wird untersucht, welche unterschiedlichen Verteilungsänderungen sich bei der Einführung von Umweltsteuern ergeben. Anhand des Beispiels der gleichzeitigen Erhöhung der Mineralölsteuer und der km-Pauschale für Fahrten zwischen Wohnung und Arbeitsstätte, wird der Frage nachgegangen, ob verteilungspolitische Kompensationen von Ökosteuerbelastungen möglich sind, ohne das umweltpolitische Ziel zu verletzen. Die Simulationen auf der Basis von Mikrodaten aus Baden-Württemberg belegen die Möglichkeit einer solchen Politik und geben damit Hinweise auf weitergehende Handlungsmöglichkeiten des Gesetzgebers.

Revisiting the relationship between unexpected inflation and output in the presence of indexation

2020 ◽  
Vol 12 (2) ◽  
pp. 245-261
Author(s):  
Pavlo Buryi ◽  
Ficawoyi Donou-Adonsou
Keyword(s):  
Theoretical Model ◽  
Financial Crisis ◽  
Global Financial Crisis ◽  
Generalized Method Of Moments ◽  
Empirical Work ◽  
Purchasing Power ◽  
Content Type ◽  
The Relationship ◽  
Unanticipated Inflation ◽  
Unexpected Inflation

Purpose This paper aims to investigate the relationship between output and unanticipated inflation when wages are indexed for the loss of purchasing power. The authors argue that the monetary authority remains useful when firms that face rigid demand index wages to compensate for the loss of purchasing power, unlike Fischer (1977), who suggested that monetary policy loses effectiveness when firms index wages. Design/methodology/approach This paper develops a simple theoretical model followed by an empirical investigation of the relationship between output and unanticipated inflation in the presence of indexation. The theoretical model assumes a perfectly competitive firm that produces a final good that has no close substitutes using one factor, labor. The demand for the product is rigid. The empirical work considers quarterly US data from 1982Q1 to 2017Q1 and uses the Generalized Method of Moments in which endogenous variables are instrumented using their own lags. This paper further considers the period before and after the recent global financial crisis. Findings This paper shows that unexpected inflation decreases the growth rate of output in the USA. The decrease is quantitatively and qualitatively stronger before the financial crisis than after the crisis. This finding suggests that the Federal Reserve should maintain higher expectations of inflation and then surprise the public with lower inflation rates. The results further suggest that regardless of how expectations are formed, firms and workers agree on the nominal wage that is equal to the realized marginal revenue product of labor. Originality/value This paper sheds light on the behavior of the central bank and its relative ineffectiveness in light of the recent economic recession.

On the Squeezing of the Middle Class: Overview and Prospects for the EU-15

2020 ◽  
Vol 28 (2) ◽  
pp. 325-342
Author(s):  
Olga Salido ◽  
Julio Carabaña
Keyword(s):  
Income Inequality ◽  
Middle Class ◽  
Technological Change ◽  
Empirical Evidence ◽  
Member States ◽  
Middle Classes ◽  
Income Share ◽  
Empirical Results ◽  
The Past ◽  
The Eu

This article was inspired by Atkinson and Brandolini’s work on the economic middle classes and deals with the evolution of the income share of the middle class compared with that of the extreme classes in the EU-15 (the EU’s first 15 member states) over the last two decades. Our research draws on the paradox of the EU officially assuming dominant ideas about rising inequalities and the squeezing of middle-class income produced by globalization and technological change while at the same time producing and disseminating empirical evidence contrary to this view. We first synthesize this evidence, also contributing some additional analyses of Eurostat data, confirming that the income share of the middle class has not changed in the past two decades, as could be expected from the invariance in income inequality. We finally put forward some considerations about the theoretical implications of these empirical results and the interaction between ideas and empirical evidence in political societies and organizations.

scholarly journals The Inequality We Want: How Much Is Too Much?

2015 ◽  
Vol 06 (03) ◽  
pp. 1550016 ◽  
Author(s):  
Alice Krozer
Keyword(s):  
Income Distribution ◽  
Middle Income ◽  
Income Share ◽  
Income Groups ◽  
Measurement Of Inequality ◽  
Over Time ◽  
Income Concentration

A key aspect defining the contemporary income distribution is the (increasing) share the top holds compared to the rest. This paper shows that income concentration increases towards the very top of the distribution, while the shares the middle- and upper–middle-income groups hold remain stable across countries and over time. Traditional indicators less sensitive to changes at the extremes of the distribution might obscure inequality's actual dimension, and thereby help perpetuate it. To avoid this, the present paper discusses a complementary indicator for the measurement of inequality: The ratio of the income share of the top 5% over that of the bottom 40%. The indicator is denominated Palma v.2, in reference to the recently suggested "Palma ratio" dividing the income share of the top 10% income earners by those at the bottom 40%.

scholarly journals Labour market flexibilization and income distribution in Europe

2021 ◽  
Vol 68 (2) ◽  
pp. 167-185
Author(s):  
Philips Arestis ◽  
Jesús Ferreiro ◽  
Carmen Gómez
Keyword(s):  
Income Distribution ◽  
Labour Market ◽  
Positive Impact ◽  
Employment Protection ◽  
Employment Protection Legislation ◽  
Temporary Workers ◽  
Real Wages ◽  
Income Share ◽  
Labour Income ◽  
Protection Legislation

This paper analyses the role played by the flexibilization of labour markets on functional income distribution. Specifically, we analyse whether employment protection legislation affects the evolution of labour income share, measured by the size of compensation of employees as a percentage of GDP, the sum of wages and salaries as a percentage of GDP and the size of the adjusted wage share, in twenty European economies. Our study?s results show that the evolution of labour income share is explained by the economic growth, the growth of employment and unemployment rates, and the growth of real wages. Regarding the role played by the flexibility of the labour market, and specifically of the employment protection legislation, only employment protection for temporary workers has a significant impact on the evolution of labour shares. Our results show that stricter provisions on the use of fixed-term and temporary agency contracts have a positive impact on the growth of labour shares.

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