Extreme Inequality in Income and Wealth

2017 ◽  
pp. 1-24
Author(s):  
Venkat Venkatasubramanian
Keyword(s):  
Income Inequality ◽  
Income Distribution ◽  
Free Market ◽  
Mainstream Economic ◽  
Market Society ◽  
Global Trends ◽  
Economic Theories ◽  
Novel Theory

Chapter one provides a summary of the global trends in income inequality and ask what kind income distribution there ought to be, under ideal conditions, in a free market society. The chapter also raises three other fundamental questions regarding the fairness, stability and optimality of such a distribution. Since these questions cannot be answered by mainstream economic theories, or by econophysics, we outline the development of our novel theory to address them.

Fairness in Income Distribution

2017 ◽  
pp. 79-142
Author(s):  
Venkat Venkatasubramanian
Keyword(s):  
Income Inequality ◽  
Income Distribution ◽  
Free Market ◽  
Mathematical Formalism ◽  
Market Society ◽  
Class Society ◽  
Equilibrium Distributions ◽  
Ideal Free

In this chapter, we develop the complete mathematical formalism for π‎-class societies at equilibrium. We prove that the fairest income inequality is lognormal, attained at equilibrium, in an ideal free market society. We also prove that it is unique, stable, social optimal, and moral. We prove that for a 2-class society, the equilibrium distributions are two non-overlapping lognormals, which can be easily mistaken for a lognormal-Pareto pair in practice.

GLOBAL TRENDS IN INCOME DISTRIBUTION: LONG-RUN INFLUENCES ON INCOME INEQUALITY

2019 ◽  
Vol 7 (7-12) ◽  
Author(s):  
THOMAS OBST
Keyword(s):  
Income Inequality ◽  
Income Distribution ◽  
National Income ◽  
Personal Income ◽  
Three Dimensions ◽  
Wage Dispersion ◽  
Comprehensive Overview ◽  
Global Trends ◽  
Developed Economies ◽  
Labour Share

This paper provides a comprehensive overview of the development in income distribution and outlines its major long-term trends of 23 countries worldwide. These countries are clustered in four groups covering the core advanced, the Nordic, the emerging, and the least developed economies of the world. This paper applies different measures to analyse income distribution in three dimensions: national income, functional income distribution, and personal income distribution. Depending on the indicators applied the time period ranges between 1960 and 2012. The empirical analysis shows that increases in national incomes are most pronounced in the advanced economies. The emerging economies also exhibit an upward trend in national income, but it has been less substantial. The least developed economies, however, have been detached from this trend and remain isolated. Moreover, this paper illustrates that there has been an enormous re-distribution of income. During the last three decades, the labour share of income has declined in nearly all countries under study. This development went hand in hand with increased personal income inequality. Disposable income inequality and market income inequality have both increased over the past 30 years. Wage dispersion also rose substantially contributing to greater income inequality. Additionally, the escalation of top income shares as well as the expansion of low paid employment has led to a growing gap between the top and the bottom income earners. This analysis also presents important interlinks between greater income inequality, the fall of the wage share, and increasing wage dispersion.

scholarly journals Market and Inequality Revisited

2006 ◽  
pp. 147-174
Author(s):  
Alejandro F. Mercado ◽  
Tirza J. Aguilar
Keyword(s):  
Labor Market ◽  
Income Inequality ◽  
Income Distribution ◽  
Market Structure ◽  
Free Market ◽  
Microsimulation Model ◽  
Oriented Structure ◽  
Distribution Of Income

The great controversy regarding the results of the application of market-oriented policies on the population's conditions of life, especially about the inequality in the distribution of income, has constituted the concern that has given origin to this paper.With the objective to test the hypothesis that a free market structure promotes a better income distribution, we have carried out several quantifications of inequality indices in the different structures of the labor market in Bolivia; also, a microsimulation model has been applied, to see whether change toward a market-oriented structure can improve the distribution of income and, lastly, we have carried out an exercise to link income inequality with social mobility.The reached results, although they are not the sufficiently strong to validate the hypothesis, are sufficiently clear to show us that the free market policies do not act in a negative way on the income distribution.

Philanthropy and Income Inequality

2018 ◽  
Author(s):  
Elizabeth Anderson ◽  
Ing-Haw Cheng ◽  
Harrison Hong
Keyword(s):  
Income Inequality ◽  
Income Distribution ◽  
Tax Policies ◽  
Middle Income ◽  
Alternative Models ◽  
Tax Relief ◽  
Bill Gates ◽  
Welfare Implications ◽  
Tax Cuts

Bill Gates recently argued that philanthropy by households at the top of the income distribution might help ameliorate income inequality, and that tax policies should take this into account. Much of the research in economics on giving has been focused on middle-income households, so we know very little about the motives for giving by the very rich. We provide some initial evidence on what drives the giving of the richest Americans. First, we extrapolate anthropological evidence on how status concerns might influence philanthropy. Second, since the richest own a significant amount of equity, we use the Jobs and Growth Tax Relief Act of 2003 to see how their giving responded to unanticipated tax cuts, particularly for dividends. Third, we consider the welfare implications of philanthropy as opposed to alternative models for redistributing the wealth of the extremely rich.

scholarly journals Income Distribution and Trade Pattern

2020 ◽  
Vol 71 (1) ◽  
pp. 1-14
Author(s):  
Sugata Marjit ◽  
Reza Oladi ◽  
Punarjit Roychowdhury
Keyword(s):  
Social Psychology ◽  
Income Inequality ◽  
Income Distribution ◽  
Behavioral Economics ◽  
Trade Pattern ◽  
Industry Trade

AbstractMotivated by recent insights from behavioral economics and social psychology, we present a theory of trade that seeks to explain inter-industry trade between countries that are similar in their production sides, but differ in their income distribution. By assuming status-dependent preferences that are non-homothetic, we show that income inequality differential can be a basis for inter-industry trade between otherwise similar economies.

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.

Institutions, Models of Capitalism and Inequality in Income Distribution: An Empirical Investigation

2017 ◽  
Vol 17 (3) ◽  
pp. 651-685 ◽  
Author(s):  
Gilberto Antonelli ◽  
Pinuccia P Calia ◽  
Giovanni Guidetti
Keyword(s):  
Income Inequality ◽  
Income Distribution ◽  
Empirical Investigation ◽  
Econometric Evidence ◽  
Definition Of ◽  
The Empirical Analysis ◽  
Statistical Indicators ◽  
Different Levels

Abstract The article analyses the role of institutions in the determination of income inequality in a sample of OECD countries. Basing on the seminal approach by Amable, the article discusses the theoretical definition of model of capitalism. The basic idea is that each model of capitalism is defined by the cobweb of complementary relationships established among different institutions. Using a set of statistical indicators of the operation of institutions in two different years, 1995 and 2010, the empirical analysis points out five models of capitalism and exhibits how their composition has changed in this lapse of 15 years. In the following sections of the article, we investigate the role played by the model of capitalism in the determination of income distribution, measured through a standard Gini index. After controlling for a set of variables, the econometric evidence shows that different models of capitalism present significantly different levels of income inequality.

COVID-19 may trigger an ideological shift over decades

2021 ◽  
Keyword(s):  
Income Inequality ◽  
Political Parties ◽  
Paradigm Shift ◽  
Free Market ◽  
Global South ◽  
Borrowing Constraints ◽  
Democratic Institutions ◽  
Content Type ◽  
Key Driver ◽  
Thomas Piketty

Significance Research by Thomas Piketty shows that a form of free-market ideology has been a key driver of rising income inequality since the 1980s. The airing of alternative ideas, the challenge of decarbonising economies and the potential for the COVID-19 crisis to reset politics raise the prospect of a paradigm shift. Impacts In much of the global South, borrowing constraints and obstacles to taxing the wealthy will make redistribution harder. Strengthening democratic institutions may be as important as strengthening pro-equity political parties to advance redistributive agendas. Political parties in OECD nations have focused on ‘identity’ issues since the 1980s; COVID-19 is bringing redistribution back to the fore.

scholarly journals Economic Growth and Income Inequality in Developing Countries

2015 ◽  
Vol 9 (6) ◽  
pp. 79-82 ◽  
Author(s):  
Morteza Nemati ◽  
Ghasem Raisi
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Income Inequality ◽  
Income Distribution ◽  
Economic System ◽  
Development Strategy ◽  
Low Income ◽  
Poverty Eradication ◽  
The Relationship ◽  
Selection Of

Nowadays, improvement in income distribution and poverty eradication and hence low inequality are served as the main objectives of economic and social development strategy even prior than primary tasks of governments. to manifest importance of income distribution, some economists adopt income inequality and income distribution in society as criteria for economic system of the community, although these criteria and measures are theoretical for the economic system and this varies from the perspective of different people, however, it denotes on  importance of income distribution among individuals. The main objective of this study was to evaluate the effect of economic growth on income inequality in the selection of low-income developing countries.To this end, using panel data and data for 28 developing countries over the period 1990-2010 the relationship between GDP and the Gini coefficient was examined. The results indicate that as per hypothesis Kuznets in the early stages of growth, income inequality increases and then it declines in later stage.

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