THE DRIVERS OF INCOME INEQUALITY IN RICH COUNTRIES

Rising income inequality has recently come centre‐stage as a core societal concern for rich countries. The diagnosis of the forces driving inequality upwards and their relative importance remain hotly contested, notably with respect to the roles of globalization versus technology and of market forces versus institutions and policy choices. This survey provides a critical review and synthesis of recent research. The focus is on income inequality across the entire distribution, rather than only on what has been happening at the very top. We pay particular attention to include what has been learned from the analysis of micro‐data, to ensure that the coverage is not unduly US‐centric and to analyses of the interrelations between the different drivers of inequality. The marked differences in inequality trends across countries and time periods reflect how global economic forces such as globalization and technological change have interacted with differing national contexts and institutions. Major analytical challenges stand in the way of a consensus emerging on the relative importance of different drivers in how income inequality has evolved in recent decades.     

THE EFFECT OF KNOWLEDGE ACCESSIBILITY ON INTERNATIONAL INCOME INEQUALITY

Using a structural model of new economic geography, we estimate the effect of accessibility to foreign knowledge on international income distribution. Whereas previous literature has mainly focused on the importance of geographical accessibility to foreign markets, this paper emphasizes the role of accessibility to foreign knowledge in determining international income inequality. Using cross-country data of income per worker, bilateral trade flows, and number of flight passengers, we find evidence that the accessibility to foreign knowledge raises per capita income significantly.     

SOURCES OF REGIONAL INCOME INEQUALITY: AN EXAMINATION OF SMALL REGIONS IN QUEENSLAND

In this study, data for the 125 Local Government Areas of Queensland are used to explain the cross-sectional variation in the Gini coefficient of income inequality. This study updates earlier work for Australian regions that has used the 1981, 1986 and 1991 census data sets and incorporates a wider range of variables, allowing the testing of several competing hypotheses. The study commences with an analysis of the spatial pattern of income inequality in Queensland. Previous work in this area has not considered problems such as spatial autocorrelation, and although no evidence of this is found, the testing uncovers heteroscedasticity with the estimation techniques used in the final version of the model accounting for this problem.     

FACTORS OF INTERREGIONAL INCOME INEQUALITY IN POSTWAR JAPAN: THEIL DECOMPOSITION AND GAP ACCOUNTING ANALYSES

This study empirically identifies some factors of interregional income inequality in postwar Japan during the period 1955–2005 using a decomposition analysis with a Theil L index and a gap accounting analysis. One major empirical finding was that interregional inequality in per capita GDP during the period 1955–2005 showed a double peaked M‐shaped curve, which was predominantly attributed to interregional inequality in labor productivity. The sectoral decomposition analysis revealed that the factors that caused fluctuations in interregional inequality in labor productivity differed from year to year. The fluctuations during the period 1960–1980 were caused by an intersectoral equilibrating process between the tertiary sector and other sectors, whereas that the fluctuations that occurred in the late 1980s and early 1990s resulted from interregional disequilibrating and equilibrating processes within the tertiary sector.     

THE DETERMINANTS OF RURAL INDUSTRIAL ESTATE PERFORMANCE IN KOREA

Since the 1980s, a total of 221 small- and medium-sized rural industrial estates have been established primarily to induce economic growth into the rural areas in Korea. Despite a growing interest in the performance of the rural industrial estates, it has not been closely examined. The purpose of this paper is to find the plausible factors that have a significant influence on the performance of the rural industrial estates, thereby providing a general understanding of the structural relationship between the estate performance and its determinants. An econometric modeling approach, called LISREL, is used to carry out this evaluation. Of several influential determinants distinguished, seven variables appear to be of substantial significance. They include the urbanization and industrialization of the estate host community, the accessibility of the individual estates to the major cities, the distances from the estates to the large industrial complexes, the local tax rates, and the government loans and incentives. The findings imply that more favorable are the estates constructed within the labor market boundaries of the major cities and adjacent to large industrial complexes. In addition to the location and environmental factors, financial funds and incentives will continue to remain as an influential factor for the success or failure of the estates.     

INCORPORATING FINANCING-RELATED DETERMINANTS OF VALUE IN THE DISCOUNTED CASH FLOW MODEL

Abstract.  The paper discusses how some of the main types of interaction between financing and value can be incorporated in the discounted cash flow model of valuation, including effects arising from taxes, transactions costs, disclosure, information asymmetry and agency problems. It explains whether a given effect should appear in a project's cash flows, in its cost of capital or as an upfront adjustment to value. Most of the effects imply that the principle of value additivity does not hold.     

IMPACT OF URBAN AND RURAL HOUSEHOLD CONSUMPTION ON CARBON EMISSIONS IN CHINA

In this paper, we utilize input–output analysis and decomposition techniques to examine the direct and indirect urban and rural per-capita carbon emissions generated by household consumption in China from 1987 to 2007. The results show that indirect emissions are considerably larger than direct emissions due to households in urban and rural areas. Indirect urban emissions increase significantly because of growing expenditures, but indirect rural emissions do not register the same increase. Direct urban emissions decrease significantly because of changes in the energy mix, but direct rural emissions show only a slight decrease. The increase in the disparity of indirect urban–rural emissions and the decrease in the disparity in direct urban–rural emissions are evident. These findings imply that both energy-saving behavior in the production sector and residential lifestyle transition – particularly in the urban areas – are significant in mitigating carbon emissions in China.