Income inequality and economic growth

Despite the extensive existing literature on income inequality and economic growth, there remains considerable disagreement on the effect of inequality on economic growth. Existing literatures find either a positive or a negative relationship. In this paper, we attempt to theoretically examine that relationship with a stochastic optimal growth model. We make the disagreement clear within a single model. We conclude (i) that both are possible – that is, higher inequality can retard growth in the early stage of economic development, and can encourage growth in a near steady state, (ii) that income redistribution by high income tax does not always reduce income inequality. Income inequality can be reduced by higher income tax in a near steady state, but it cannot be reduced in the early stage of economic development, and (iii) that two government polices – rapid economic growth and low income inequality – can be achieved by low income tax in the early stage of economic development, but both cannot be achieved simultaneously in a near steady state.     

人力资本不平等与人力资本投资的生育率机制--基于面板数据联立方程模型的分析

人力资本不平等对人力资本投资有着重要的影响。分析了人力资本不平等通过生育率影响人力资本投资的机制。通过构建面板数据联立方程模型对我国省际数据的实证研究，发现人力资本不平等与人力资本投资之间存在很强的负相关。实证结果表明，当其他条件都相同时人力资本不平等程度越高的地区居民的生育率越高，而高生育率反过来阻碍人力资本投资，即生育率机制是显著的。     

FDI and income inequality in Africa

This paper tests the impact of foreign direct investment (FDI) on income inequality in a panel of 16 African countries from 1980 to 2013. We controlled for both non-linear effects and heterogeneity by using a Pooled Mean Group estimator. There is robust evidence that the relationship is non-linear and we document a U-shaped effect of FDI on inequality. The results reveal that FDI increases equality of distribution of income in the countries examined. However, this effect diminishes with further increases in FDI. Policy implications emanating from this study suggest that although FDI may be growth enhancing, FDI-induced growth may not necessarily translate into a reduction in inequality. FDI has to be structured in such way that the resulting skill-biased employed is mitigated. To address inequality, policy implications from this study imply that FDI has to target both ends of the labour market.     

Ownership Restructuring, Marketization and Wealth Inequality in Urban China： 1995 and 2002

This paper proposes a property transformation perspective to examine the mechanisms of wealth accumulation and wealth inequality creation during China's post‐1978 transformation. It examines how enterprise ownership restructuring, marketization and state politics have resulted in greater wealth inequality between cadres and ordinary workers, between public sectors/organizations and private sectors/organizations. Mainly drawing on data from the Chinese Household Income Project conducted in 1995 and 2002, we find that the property transformation process has created greater wealth disparity among different occupational groups and among those working in different work organizations since the mid‐1990s. However, it is inconclusive whether non‐housing wealth or total household wealth are increasing at the same pace across different occupations and work organizations with the growing market penetration and the spread of privatization.     

Accounting for Cross‐Country Differences in Wealth Inequality

There is considerable cross‐country variation in levels of household wealth and in wealth inequality. This paper assesses the extent to which these differences can be accounted for by differences in the distributions of households' demographic and economic characteristics. A counterfactual decomposition analysis of micro data from five countries (Italy, U.K., U.S., Sweden and Finland) is used to identify the effects of characteristics on component wealth holdings, their value and their distribution. The findings of the paper suggest that the biggest share of cross‐country differences is not attributable to the distribution of household demographic and economic characteristics but rather reflect strong unexplained country effects.     

Wealth and the capitalist spirit

The wealth distribution in the U.S. is more unequal than either the income or earnings distribution, a fact current models of saving behavior have difficulty explaining. Using Max Weber’s [Weber, M. (1905). The Protestant Ethic and the Spirit of Capitalism. Charles Scribners’ and Sons (1958 translated edition)] idea that individuals may have a ‘capitalist spirit’, I construct and simulate a model where individuals accumulate wealth for its own sake rather than as deferred consumption. Including capitalist spirit preferences in a simple life cycle model, with no other modifications, generates a skewness of wealth consistent with that observed in the U.S. economy. Furthermore, capitalist spirit preferences provide a way to generate decreasing risk aversion with increases in wealth without resorting to idiosyncratic rates of time preference.     

Estimation employing a priori information within mass appraisal and hedonic pricing models

Both statistical appraisal and hedonic pricing models decompose houses into a set of individual characteristics. Regression estimates yield the contribution of each characteristic to total value. Unfortunately, straightforward application of OLS may produce untenable results such as implausible coefficient magnitudes or incorrect signs. Often the suspected cause is multicollinearity. This article examines the effect on estimation efficiency of differing levels of multicollinearity, R², and a priori information in the form of sub-market cost data, by comparing inequality restricted least squares (IRLS) with OLS in a series of Monte Carlo experiments. The IRLS procedure investigated here hybridizes the statistical market approach implemented by OLS, and the more traditional cost approach. The experiments show dramatic gains in estimation efficiency from exploiting a priori information through IRLS.     

Prices and Regional Variation in Welfare

One would expect regional differences in prices to influence conclusions concerning levels and distributions of well-being. Although there is anecdotal evidence of significant price dispersion across regions, there is no governmental source of data that measures differences in price levels. In this paper I integrate estimates of regional prices with expenditure data from the Consumer Expenditure Surveys to assess the influence of price differences on living standards in the United States. While prices have little effect on inequality, estimates of poverty and the standard of living change substantially with the inclusion of regional price variation.     

Precautionary Demand for Education, Inequality, and Technological Progress

This paper offers an explanation for the evolution of wage inequality within and between industries and education groups over the past several decades. The model is based on the disproportionate depreciation of technology-specific skills versus general skills due to technological progress, which occurs randomly across sectors. Consistent with empirical evidence, the model predicts that increasing randomness is the primary source of inequality growth within uneducated workers, whereas inequality growth within educated workers is determined more by changes in the composition and return to ability. Increasing randomness generates a precautionary demand for education, which we show empirically to be significant.