A Comparison of Income and Expenditure Inequality Estimates: The Australian Evidence, 1975–76 to 1993–94

Using Australian unit record data this paper compares income and expenditure inequalities over the period 1975–76 to 1993–94. The study finds inconsistencies between the two inequality movements over much of this period. We also observe differences in the nature of income and consumption disparities. Both approaches show that the 'within group' inequality dominates the 'between group' component when the population is divided into household types. The inequality estimates are sensitive to the equivalence scale used as the household size deflator but not to the cost of living index used as the price deflator.     

Unemployment Shocks and Income Distribution: How did the Nordic Countries Fare during their Crises?

We study the inequality of disposable income in Denmark, Finland, Norway and Sweden during the late 1980s and early 1990s when unemployment rose dramatically in all four countries. A standard measure of inequality — the Gini coefficient – was surprisingly stable in all countries during this period. By decomposing the Gini into income components, we test hypotheses about the reasons for this stable income distribution. Our most straightforward hypothesis, that rising unemployment benefits counteracted the impact of more unequally distributed earnings, receives only limited support. More complex mechanisms seem to have been at work.
JEL classification: D 30; D 31; J 60     

THE IMPACT OF CAPITAL GAINS ON THE DISTRIBUTION OF INCOME IN BELGIUM

In an earlier paper, we presented estimates of capital gains for a number of categories of assets owned by Belgian households. The purpose of the present paper is to see how the distribution of disposable income between socio-economic groups is modified when one adopts a "broadened" definition of income which includes capital gains corrected for losses of purchasing power.
The main result of the study is that at current prices, the adoption of a broadened definition of income strongly increases disparities between socio-economic groups. However, when one takes into account losses in purchasing power, conclusions differ according to the period analyzed. For the years 1953–68, it appears that the distribution of broadened disposable income is more unequal than the distribution of disposable income. For the years 1969–77 when inflation was high, the adoption of a broadened definition of income has reduced disparities, with the important exception of old age pensioners.     

Effects of monetary and government spending policy on economic inequality

Using detailed micro-level income and expenditure data, we study the effects of monetary and government spending policy shocks on income and expenditure inequality in the US from 1990 to 2018. We find that expansionary monetary and government spending policy shocks systematically decrease income, disposable income and expenditure inequality. There is evidence of time variation on the effects and monetary policy and transfer payment shocks. Various impulse responses suggest that the impacts of the policy shocks increase during and after the Great Recession. The responses of income and expenditures of households at different percentiles suggest that expansionary monetary and government spending policy have a larger positive impact on households with low income and expenditures relative to those at the top of the distribution. We do not find evidence of the significant impact of Quantitative Easing policies on income inequality, however, expenditure inequality appear to increase due to the policies.     

Income Inequality and Income Mobility in the Scandinavian Countries Compared to the United States

This paper compares income inequality and income mobility in the Scandinavian countries and the United States during 1980–90. The results suggest that inequality is greater in the United States than in the Scandinavian countries and that this inequality ranking of countries remains unchanged when the accounting period of income is extended from one to eleven years. The pattern of mobility turns out to be remarkably similar, in the sense that the proportionate reduction in inequality from extending the accounting period of income is much the same. But we do find evidence of greater dispersion of first differences of relative earnings and income in the United States. Relative income changes are associated with changes in labor market and marital status in all four countries, but the magnitude of such changes are largest in the United States.     

Spain is different: Falling trends of inequality

In this article we characterize the evolution of inequality in hourly wages, hours of work, labor earnings, household disposable income and household consumption for Spain between 1985 and 2000. We look at both the Encuesta Continua de Presupuestos Familiares and the European Household Community Panel. Our analysis shows that inequality in individual net labor earnings and household net disposable income has decreased substantially. The decreases in the tertiary education premium and in the unemployment rate have been key ingredients to understand this falling trend. Public transfers have played a crucial role in smoothing out the inequality arising in the labor market, but instead the Spanish family does not seem to have been an important insurance mechanism. Regarding household consumption, inequality has fallen much less than inequality in household net disposable income, with the decrease mostly concentrated in the second half of the eighties. This suggests that the reduction in income inequality has affected the sources of permanent differences between households only during the second half of the eighties. Our estimates of the earnings process for the period are consistent with this view.     

我国城镇居民收入分配差距的实证研究

笔者首先计算了几种度量收入分配差距的指标,从不同角度的分析得到了我国城镇居民收入分配差距不断扩大的结论;其次估计了我国城镇居民的基尼系数.通过计量经济模型,检验了高、中、低各阶层可支配收入与收入分配差距之间的关系,得出结论:增加中低收入阶层的可支配收入,遏制高收入阶层可支配收入,可以减小基尼系数,从而降低收入分配差距;进一步通过模型发现,我国发达地区的经济发展和收入分配差距呈现出倒U型规律,说明经济发展达到一定水平,收入分配差距有望缩小.     

THE INEQUALITY OF EMPLOYMENT AND SELF-EMPLOYMENT INCOMES: A DECOMPOSITION ANALYSIS FOR THE U.K.

U.K. employment and self-employment income inequality are analysed over 1979–94/95. Robust inequality decompositions reveal occupation to be a relatively important and hitherto neglected determinant of earnings inequality. In contrast, self-employment income inequality is harder to explain, although occupation is also the most important single factor in the mid-1990s. The paper also provides a novel implementation of a decomposition of changes in Kolm's inequality index.     

THE SPATIAL STRUCTURE OF INCOME INEQUALITY IN THE ENLARGED EU

This study examines how personal disposable income is distributed across regions, countries and larger geographical areas in the EU25 and how this distribution changed during the second half of the 1990s. Moreover, it assesses the "statistical" effect resulting from the enlargement of the European Union, and therefore the community of people for which inequality is measured. A three-level spatial decomposition of the overall personal inequality in the EU reveals that a fifth of its amount is attributed to the east–west income gap and that intra-regional inequality accounts for three quarters. The study detects a convergence of both average national income levels and within-country personal income inequality. Inequality is rising primarily in the Scandinavian social-democratic welfare states and decreasing in the Mediterranean countries of the EU15. In Eastern Central Europe, the rapid growth of inequality which had been observable during the first years of transition has come to an end.     

Distributional national accounts for the Netherlands and a comparison with 12 other countries

Most inequality studies rely on micro data that do not capture a substantial share of income identified in the national accounts. In the Netherlands, almost one fifth of household disposable income is missed by current inequality statistics. In this paper, we present inequality statistics for the Netherlands that capture all of household income, so-called distributional national accounts. Compared to the current inequality statistics, the Gini coefficient for disposable income increases substantially from 0.289 to 0.337. Cross-country comparisons show that such a change between Gini coefficients based on micro-data versus Gini coefficients based on distributional national accounts does not apply to all countries. The difference between both Gini coefficients varies not only between countries in the size, but also in the sign of the difference.     

Does the Profile of Income Inequality Matter for Economic Growth?

This paper investigates the importance of the shape of the income distribution as a determinant of economic growth in a panel of countries. Using comparable data on disposable income from the Luxembourg Income Study, results suggest that inequality at the top end of the distribution is positively associated with growth, while inequality lower down the distribution is negatively related to subsequent growth. These findings highlight potential limitations of an exploration of the impact of income distribution on growth using a single inequality statistic. Such specifications may capture an average effect of inequality on growth, and mask the underlying complexity of the relationship.     

Economic Restructuring and Income Inequality in Urban China

Economic transition from a planned to a market oriented economy is often associated with a widening of income inequality. The nature of this change, however, may differ during different stages of the economic transition. This paper investigates the increase in income inequality in urban China during two phases of economic reform: a moderate reform era (1988–95) and a radical reform era (1995–99). It is found that although income inequality increased considerably during both stages, the nature and causes of the increase are different. In the moderate reform period, the increase in inequality was a result of some parts of society sharing more of the economic gain than others, and the main cause of this inequality is regional income dispersion. During the radical reform period income reductions at the lower end of the distribution is observed, and it is mainly due to the large-scale unemployment generated by labor reallocation.     

INEQUALITY AND THE MEASUREMENT OF RESIDENTIAL SEGREGATION BY INCOME IN AMERICAN NEIGHBORHOODS

American metropolitan areas have experienced rising residential segregation by income since 1970. One potential explanation for this change is growing income inequality. However, measures of residential sorting are typically mechanically related to the income distribution, making it difficult to identify the impact of inequality on residential choice. This paper presents a measure of residential segregation by income, the Centile Gap Index (CGI), which is based on income percentiles. Using the CGI, I find that a one standard deviation increase in income inequality raises residential income segregation by 0.4–0.9 standard deviations. Inequality at the top of the distribution is associated with more segregation of the rich, while inequality at the bottom and declines in labor demand for less-skilled men are associated with residential isolation of the poor. Inequality can fully explain the rise in income segregation between 1970 and 2000.     

Can fiscal redistribution undo skill-biased technical change?: Evidence from the French experience

The inequality of labor earnings among working-age individuals has gone up in all western countries during the past 25 years, either through rising wage inequality (US, UK) or through rising unemployment (Continental Europe). Policy regimes did matter a great deal, however, as far as the inequality of disposable income is concerned. In a country like France, transfers to the unemployed were sufficiently massive to prevent income inequality from rising. This paper argues that the way fiscal redistribution has managed to counteract skill-biased technical change in countries like France is somewhat paradoxical. The same distributive stability could have been obtained at a lower cost by following a job subsidies strategy rather than an income maintenance strategy, simply because it is always less costly to have people at work producing something. We explore several potential explanations for this paradox.     

The Macroeconomic Outlook

This two-year quarterly forecast from the Access Economics Murphy (AEM) model updates that presented in the 2nd quarter 1992 issue of the Australian Economic Review.
The economic recovery is patchy, with only public final demand and housing investment moving forward decisively, but could broaden in 1993, if private business fixed investment begins increasing. It has fallen by a recession-inducing one-third since the middle of 1989.
GDP growth could rise from a mediocre 2.4 per cent in 1992–93 to a strong 4.3 per cent in 1993–94.
Unemployment may remain around 11 per cent for the remainder of 1992–93, before falling to a year-average level of about 10 per cent in 1993–94.
CPI inflation under 2 per cent per annum on a year-on-year basis is likely in 1992–93 but, with economic recovery and the flow-through effects of the depreciation, it is forecast to rise to 4 per cent per annum in 1993–94. The current account deficit is rising with economic recovery, and by 1993-94 could be 5 per cent of GDP, compared with a sustainable level of 3 to 3.5 per cent.
An assessment of the accuracy of the AEM model and government official economic growth forecasts in the recession years of 1990–91 to 1992–93 was conducted, using the forecasts from the Business Review Weekly's panel as a reference point. The high accuracy ranking of the AEM forecasts is consistent with international evidence that the most accurate forecasts are model-based with judgmental adjustments. The official forecasts met international standards of accuracy from 1978–79 to 1989–90, and the recent fall in their performance is puzzling.     

Inequality within generation: Evidence from France

Intra-generational inequalities focus on the distributions within age groups. On the basis of French household income surveys carried out from 1996 to 2014, the Gini coefficient and D9/D1 inter-decile ratio were calculated so as to evaluate intra-generational income inequality before and after redistribution by the tax and welfare system. Age-Cohort-Period models were then estimated in order to disentangle age and generation effects. Over a life cycle, intra-generational inequality displays a hump-shaped curve peaking at age 55–59. This inequality is significantly lower among the youngest, whichever inequality indicator is used, and among the oldest, when measured by the inter-decile ratio. Comparison of pre- and post-redistribution income reveals that the tax and welfare system particularly reduces inequality among the young. Intra-generational inequality measured by the Gini coefficient increases significantly from one generation to the next. Measured by the inter-decile ratio, the increase is considerable for the gross income of those generations born from the 1970s on. However, the tax and welfare system has compensated for this increase, because analysis of the inter-decile ratio applied to disposable income shows no significant difference between generations.     

Policy,Demography, and Market Income Volatility: What Shaped Income Distribution and Inequality in Australia Between 2002 and 2016?

Isolating the impact of policy, demographic shifts, and market volatility on changes in income inequality is of great interest to policymakers. However, such estimation can be difficult due to the complex interactions and evolutions in the social and economic environment. Through an extended decomposition framework, this paper estimates the effect of four main components (policy, demography, market income and other factors) on the year-over-year changes in income inequality in Australia between 2002 and 2016. This was a period marked by substantial policy, population, and economic shifts due to factors such as the mining boom, the global financial crisis and increasing immigration. The framework also incorporates a flexible non-parametric market income model which captures demand-side shock better than a standard parametric model. Our results suggest that market income was the primary driver of income inequality for all segments of the income distribution in Australia over the past 15 years. Policy factors, moreover, have had the largest net impact on reducing inequality overall, especially for lower income earners.     

A Gini decomposition analysis of inequality in the Czech and Slovak Republics during the transition1

Disposable income inequality, as measured by the Gini coefficient and using the Family Budget Survey data, increased very little, and by a similar amount, from 1989 to 1993 in the Czech Republic and Slovakia. This surprising result is examined with an analysis of changes in the channels of redistribution and Gini decomposition. We find that the sizeable increase in overall inequality due to changes in the wage earnings component is mitigated by changes in the tax and transfer components in both republics. As for the relative effects of government policies, changes in the transfer component contributed more than changes in the tax component to lowering the growth of inequality in the Czech Republic, while the reverse was true for Slovakia.     

DEMOGRAPHIC TRENDS AND CONSUMPTION INEQUALITY IN AUSTRALIA BETWEEN 1975 AND 1993

We examine trends in consumption inequality among Australian households using the Australian Bureau of Statistics Household Expenditure Surveys collected over the period 1975 to 1993. We find that the distribution of consumption is much more equal than that of income and that both income and consumption inequality rose by significant amounts over the period. However, consumption inequality rose by much less (the Gini coefficient for income inequality rose by 17 percent while that for nondurable consumption rose by 9 percent). We then examine the effects of demographic trends, specifically population aging and changing family structures, and find they account for only a minor fraction in the overall growth in economic inequality.     

INCOME MOBILITY IN SPAIN: HOW MUCH IS THERE?

Traditional cross-sectional research is unable to measure the degree of income mobility in an income distribution. Using longitudinal data and various income stability indices, this paper measures the level of permanent inequality (immobility) in Spain for the period 1985–92. Results indicate that the transitory component of inequality is large and the level of income mobility increases over time while income inequality decreases slightly. More stability is found at the top than at the bottom of the income distribution and the range of the registered movements is rather short.