The Impact of Family and Child-Allowances on Income Inequality in Poland. Gini Decomposition by Income Sources

Research background: This paper analyses how different income sources affect the level of inequality in Poland, with focus on the role of family and children related allowances in decreasing income inequalities in 2015–2017. Therefore, the study has focused on the various subgroups of households with children. Purpose: The paper is aimed at examining the extent to which family and children related allowances affect household income inequality and identifying whether they affect inequality in various groups of households in the same way. Methodology: The study was carried out on micro-data gathered by Eurostat. To examine the extent to which different income components affect income inequality, we decompose the Gini coefficient according to the method introduced by Lerman and Yitzhaki. Results: Our study revealed that for most households with children, the inequality-reducing effect due to family and children related allowances increased in 2017 compared to 2015. However, despite the additional child-raising benefit under the “Family 500+” programme, income taxes and social security contributions remained by far the most important factor in reducing household income inequalities in Poland. Novelty: To our knowledge, no study has yet attempted to assess the extent to which family and child-allowances affect income inequality based on real data. The present analysis takes a step towards filling this gap. Unlike other studies based on microsimulation, in this paper we made use of the representative micro-data derived from the EU-SILC study.

Income inequality and conflicts: A Gini decomposition analysis

There has been little research examining how income inequality may or may not contribute to the “grievance” aspect of conflict. For the most part, the measure used is the traditional Gini index, which is suitable to reflect vertical inequality (VI) rather than horizontal inequality (HI). Calculating HI requires the ability to decompose inequality indices, especially the Gini index, into a within-subgroup component and a between-subgroup component. There exists a long-standing stream of literature discussing how to decompose the Gini index. This article discusses the shortcomings of existing Gini decomposition methods and proposes a novel method that divides the Gini index into within-subgroup and across-subgroup components. This novel method is then applied to the case of Thailand in the years 2009–2017. The differences in the two components derived from the method of this article and those of existing methods are large. In addition, the HI measure this article introduces is also large relative to non-Gini measures such as the Theil and Shorrocks indices. Therefore conflict-related papers that include an existing Gini decomposition and HI measure among their independent variables may wish to test their models with those of this article and other measures—to examine if the results are consistent and to mitigate a risk of misleading policymakers.

Dynamics of Livelihoods, Income, and Poverty

Chapter 5 presents a systematic analysis of urban poverty by examining changes in the human-capital composition of the labour force, in the livelihoods of the respondents, and the level and composition of income for different occupational groups. It also identifies the determinants of household income with the help of a multivariate regression model, using the household-level data. Alongside, it examines the distribution of income over time, changes in the degree of inequality, and estimates the contribution of different sources of income to the income inequality with the help of the Gini decomposition analysis. It shows notable reduction in the incidence of moderate and extreme poverty in 2010. Also, it estimates changes in the incidence, intensity, and severity of poverty, identifying the correlates of poverty for Dhaka city in order to answer the question: is the poorer segment of the urban population benefitting from positive economic trends?

Supermarkets and Rural Inequality in India: A Case Study of Reliance Fresh

Drawing upon insights from growing strand of value chain literature, this article examines primary data collected from farmers supplying cauliflower and spinach to Reliance Fresh in the outskirts of Jaipur to understand the implication for farmer households of emergence of supermarket in a smallholder-dominated setting. The article finds that as a lead firm, Reliance Fresh is adopting flexible models of sourcing, devoid of any resource provision, to procure fresh produce of required quality and standards. In such a context, the barrier to participation of smallholders in supermarket-driven agri-food system varies across crops, depending on resource intensity of crops. Participation of smallholders, poorly endowed with human and physical capital, is limited in resource-intensive crop, such as cauliflower, because of high entry barrier in terms of requirement of assets. In contrast, entry barrier is low for smallholders in labour-intensive crop such as spinach, but competition among them, endowed with family labour, bid the rent down to the minimum. Gini decomposition exercise indicates that the emergence of supermarket-driven agri-food system has adverse distributional consequence in rural agrarian setting. Promotion of wholesale market with better infrastructure and encouragement of farmer federation as institutional innovations are suggested for inclusive agri-food marketing system.

Effects of the Income Stabilization Tool on farm income level, variability and concentration in Italian agriculture

This paper provides an ex ante assessment of the effects of the Income Stabilization Tool (IST), a new risk management tool proposed in the Common Agricultural Policy of the European Union. We investigate the effects of IST on income variability and levels as well as on income inequality in the farming population. We take Italian agriculture as an example as the introduction of IST is currently under discussion there. A rich panel of 2777 farms was studied over a period of 7 years. We use stochastic simulation to derive different income inequality estimates and apply Gini decomposition approaches to assess the distributional implications of IST. We compare the current income situation with that resulting from a hypothetical implementation of IST under different policy scenarios, also accounting for reduced levels of CAP direct payments. We find that IST not only stabilizes farm income but also enhances its level and reduces income inequality in Italian agriculture. IST is more effective in reducing income inequality when farmers pay contributions to mutual funds that are proportional to their income compared to the case of flat rate contributions. Finally, results do not support the hypothesis that the impact of IST will differ if the level of direct payments were to be reduced. Thus, results seem robust enough to accommodate future policy conditions.

Class inequality and capital accumulation in Brazil, 1992–2013

This article explores the patterns of class inequality and capital accumulation in Brazil, showing the drivers and limits of the decline in inequality that occurred during the Workers’ Party governments. It proposes that minimum wage hikes and greater social security changed the demand pattern and kick-started a cumulative causation process. Growth and redistribution thus reinforced each other for a period, and then spelled their own limits. As growth accelerated in the 2000s, a Gini decomposition indicates that class inequality decreased, but confined to changes between workers—capitalist income and social stratification were preserved. This also endogenously led to a regressive structural change, as low-productivity, labour-intensive services grew and international trade patterns worsened. This created a medium-term dependence on commodity prices for balance-of-trade solvency, and heightened cost-push inflation, which could not be overcome under the limited policy framework in place. The constrained basis for reducing inequality and the regressive structural change underscore that developmental strategies requires broad, multi-dimensional inequality-reducing measures and an encompassing catching-up project.

Income Distribution in Turkey during the Global Financial Crisis

The aim of this study is to examine mechanism responsible for the behavior of the income and earning inequality in Turkey during the global financial crisis based on data from the 2006 to 2014 Income and Living Conditions Survey. Gini decomposition by income source is employed in order to provide an analysis of the contribution of the various income sources to the evolution of income inequality and to assess the impact of a marginal percentage change in the income from a particular source on income inequality. For examining the contributions of specific variables (education, position in occupation, economic sector) to the interpretation of labor earnings inequality in terms of their gross and marginal contribution, we use static decomposition of Theil T index.