Do Education and Income Really Explain Inequalities in Health? Applying a Twin Design

We apply a twin design to examine the relationship between health and education and income. The estimated associations between health and education and income, controlling for unobserved endowments, at the twin‐pair level, are lower than estimates obtained via ordinary least‐squares (OLS) on the same sample. Thus, OLS‐based effects of education and income are biased, exaggerating the contribution of education and income to health inequality. The main part of health inequality is explained by within‐twin‐pair fixed effects, incorporating family background and genetic inheritance. It appears that education and income policies have less to offer for reducing health inequality than is usually assumed.     

A panel analysis of income inequality and energy use

This paper investigates the relationship between energy consumption and income inequality in an unbalanced panel of 144 countries over the period 1990–2018. Using fixed effect and instrumental variable panel methods and controlling for other determinants of inequality, I find a large and strong negative relationship between energy use and income inequality. The paper also demonstrates that results hold for models which divide the total sample into subsamples of economic blocs and regions. In addition, greater energy use reduces the income share of the top 10% and increases the share of the bottom 40%.     

Income Distribution and Aggregate Saving: A Non‐Monotonic Relationship

Drawing on a panel of advanced economies, this paper documents a concave and non‐monotonic link between inequality and the aggregate household saving rate. We find that, at a low level of inequality, more inequality is associated with higher saving; but we also show that a negative relationship between inequality and saving prevails where inequality is high. Using different empirical approaches, we locate the turning point, where the marginal effect of inequality turns from positive to negative, at a net income Gini coefficient of around 30. Moreover, we show that the relationship between inequality and saving also depends on financial market conditions. While inequality increases saving, when credit is scarce it tends to reduce saving at high levels of credit. This paper primarily focuses on household saving, yet we also find some evidence for a non‐monotonic effect of inequality on private saving, national saving, and the current account balance.     

CAN GREATER ATTENTION TO WOMEN'S RIGHTS HELP ADDRESS INCOME INEQUALITY?

We investigate the relationship between women's economic, social, and political rights with the level of income inequality. We use dynamic panel estimation to check our hypothesis that that strong rights for women translate into higher participation in economic productive activities, improve income and education and support for future generations, thus reducing the overall income inequality in the economy. We further look at how a country's overall economic performance and the status of women's education alter the relationship. The relationship is strengthened if countries are either in the higher‐income spectrum or have higher levels of female educational attainment. (JEL O1, I00, H00)     

Income inequality and credit expansion in post-communist countries

There is an on-going debate on the antecedents and consequences of income inequality. Recent studies find that income inequality was a cause of the recent financial crisis. However, the findings on the inequality–indebtedness relationship are mixed and based on analyses of developed countries. The aim of this research is to test how income inequality influences borrowing in post-communist countries, whose financial markets are not very developed, which has important implications for income inequality. Therefore, we include financial system development in the analysis. We base our analysis on state-level panel data and find that income inequality will increase indebtedness in the private sector. However, these results are model and region specific. To preclude higher income inequality and the emergence of a financial crisis, policies should be directed towards improving the role of financial intermediaries and stock markets.     

Demand for education in China

Abstract

This paper offers an explanation of the quantitative changes in education spending by the framework of demand analysis, including the changes in the ratio of educational funding to GDP in the period 1991–2002. The income effect is estimated mainly by using cross-provincial data, while time series data are used to estimate the price effect. Changes in government and non-government spending through time can be satisfactorily explained by the income and price effects. Demand for education services in the three levels of primary school, secondary school and higher education, and aggregate demand for all education services are investigated. The relation between income inequality and inequality in education opportunities is briefly discussed. Ten important findings are stated.     

我国收入差距与经济增长的面板协整与因果关系研究

笔者运用最近发展起来的面板协整技术,分析了我国收入差距与经济增长的关系。研究结果表明,全国以及东中西部的收入差距与经济增长之间存在长期的稳定关系;尽管对于全国和东部地区,收入差距和经济增长的因果关系并不明显,但对于中部和西部,收入差距和经济增长之间存在长期和短期的因果关系。     

The political economy of public education

I study the relationship between income inequality and public spending in education in a voting model. Voters collectively choose the uniform quality level of public education, the amount of a public good, and the tax rate on labor income. Parents can decide to opt-out of the public education system by purchasing private education at the desired quality level, and children’s expected income is assumed to be increasing in the quality of education. I show that higher income inequality is associated with higher governmental spending in education if and only if the expected marginal returns to education are larger for the children of relatively low income parents. In turn, better public education tends to reduce future inequality. These results are consistent with most findings in the empirical literature about public investment in education. Lastly, I show that for other kind of publicly provided goods, such as health care, the relationship with income inequality exhibits an ambiguous or opposite sign.     

ECONOMIC FREEDOM AND GROWTH IN U.S. STATE‐LEVEL MARKET INCOMES AT THE TOP AND BOTTOM

This paper investigates the relationship between economic freedom and income growth and inequality across U.S. states over the period 1979–2011. The focus is on market income at the top and bottom of the income distribution. Results show that increases in overall freedom are associated with average income growth. When viewed separately, an increase in overall freedom is associated with larger income growth rates for income earners in the bottom 90% relative to the top 10%. Interestingly, results show that increases in overall economic freedom are related to larger relative growth rates for the top 10% incomes within high‐income states and larger relative growth rates for the bottom 90% incomes within low‐income states. Top‐to‐bottom income ratio regressions suggest a negative and statistically significant relationship between economic freedom and income inequality. (JEL D63, P16, R11)     

The impact of education expansion on wage inequality

The findings on education expansion and income inequality have important implications for policymakers to implement effective policies to reduce income inequality. This study attempts to explain how education expansion affects income inequality by education distribution and the rate of return to education. We decompose the effect of education expansion on wage gaps into price effect and structure effect. We compare the income inequality from 2002 to 2013 using the Chinese Household Income Project (CHIP) 2002 and CHIP2013 survey data and employ FFL decomposition method. Our findings suggest that income inequality increased in 2013 and that income inequality among the high-income groups increased even more significantly. The structure effect of education expansion on income inequality is negative, when average education increases one year, the income gap between 80th and 20th will decrease 1.2%, in other words, education expansion decreases income inequality by allowing a wide range of individuals to attend college. However, this effect is offset by the price effect, which is positive and much more significant in magnitude. One extra year of average education will increase income gap by 29% which means that the demand for high-skilled labour is increasing faster than the supply and thus lead to the increasing premium for higher education return.     

我国城乡教育不平等与收入差距扩大的动态研究

通过构造一个内生收入函数模型,利用省级面板数据,本文实证研究了我国城乡教育不平等与收入差距扩大的动态关系.研究发现:城乡教育不平等是收入差距扩大的一个重要原因,城乡教育差距第上升1%,城乡收入差距将上升6.4个百分点;并且随着市场化改革的深入,教育差距对收入差距的影响越来越重要.     

Meeting the Social Policy Challenges Facing Korea

Korea faces the fastest population aging among Organisation for Economic Cooperation and Development countries and increasing levels of income inequality and relative poverty. While economic growth will help address these challenges, growth alone is not sufficient, making it necessary to introduce policies to promote social cohesion. First, the National Pension Scheme and the National Health Insurance need to be improved. Second, Korea should develop well‐targeted social programs and expand the earned income tax credit. Third, it is important to reduce labor market dualism, a major cause of inequality due to the large wage gap between regular and non‐regular workers. Fourth, education reform is needed to lower the financial burden of tertiary education, reduce the heavy reliance on hagwon and increase spending on preprimary education. At the same time, it is essential to maintain a sound fiscal position by increasing tax revenues, primarily through indirect taxes and environmental taxes, to cover rising social spending.     

Entrepreneurship and income inequality: a spatial panel data analysis

The main objective of this paper is to empirically analyze the relationship between entrepreneurship and income inequality. We use a spatial panel data analysis for both 33 high-income countries and 39 middle- and low-income countries over a period of 11 years. Estimation results and rigorous diagnostic analysis suggest that: (i) there is a strong support for the existence of an inverted U-shaped relationship between entrepreneurship and income inequality espoused by the Kuznets Curve hypothesis; (ii) the relationship between entrepreneurship and income inequality is negatively moderated by country’s level of economic development; (iii) regardless of income inequality levels, entrepreneurship has a non-linear relationship with income per capita; (iv) gross domestic expenditure on research and development exhibits significant negative impacts on entrepreneurship; (v) significant mixed effects on the likelihood of entrepreneurial activity are observed with governance, globalization, population growth rate, and competitiveness variables; (vi) there are significant mixed feedback effects on entrepreneurship; and (vii) there are statistically significant, positive as well as negative spatial spillovers to country-level entrepreneurial activity.     

The Relationship between Income,Wealth and Age in Australia

This article analyses the relationship between income, wealth, wealth‐adjusted income and age in Australia using a 2009–10 cross‐sectional data set. The main findings are: (i) wealth and wealth‐adjusted income generally rise with age, while income is constant across the life cycle; (ii) both income inequality and wealth inequality rise until mid‐life and fall thereafter, while wealth‐adjusted income inequality depends on the method of calculation used, one showing a fall in later life and another showing no fall; and (iii) after income, wealth and wealth‐adjusted income inequalities are adjusted for age, underlying inequality is lower in all three cases.     

Economic reform and interprovincial inequalities in China

This note is an attempt to explore two issues: (1) the trend of interprovincial inequality in the post-1978 reform era in China; and (2) the factors behind the dynamics of interprovincial inequality. Using recently released provincial gross domestic product (GDP) data, we have shown that interprovincial inequality decreased in the fast half of the 1980s, but started to increase in the second half of the 1980s. To understand the impact of sectoral reforms on interprovincial inequality, the overall inequality in provincial per capita GDP is decomposed into the contributions by the primary, secondary and tertiary sectors. It seems that the trend of interprovincial inequality has been largely induced by the reforms of the industrial sector which make up a large share of the secondary sector. In addition, national income data from the socialist national accounting system are used to identify the impact of interprovincial resource flows on interprovincial inequalities. The findings seem to suggest a relative decline in the role of redistributive budgetary transfers.     

Relationships between corruption,political orientation,and income inequality: evidence from Latin America

This research sheds light on the analysis of the impact of corruption and political orientation on income distribution in Latin America. Although it has been theoretically demonstrated that corruption worsens the income distribution, the empirical evidence has yielded ambiguous results based on biased estimates not considering a measurement error in the estimation of inequality. This article fills this gap by correcting the previous measurement error bias in the fixed-effects estimation. Additionally, political orientation and its relationship with income inequality are also investigated. The sample covers 18 Latin American countries between 1996 and 2012. Results reveal that corruption increases income inequality.     

Income inequality between overlapping and stratification: a longitudinal analysis of personal earnings in France and Italy

The aim of this paper is to gain new insights into the generation process of personal income in France and Italy, two countries that are in close geographical proximity but have a large disparity in terms of income growth and distribution. In the first step, the potential of EU-SILC balanced panel (2004–2007) is exploited by random effects models, which also make it possible to explore the primary factors that are likely to explain differences in generating personal labour earnings. In the second step, the ANOGI (Analysis of Gini) decomposition enables one to assess the contribution of each sub-population to overall income inequality and the degree to which each subgroup is stratified. A joint evaluation of income determinants gives evidence of the high complexity of inequality process and throws light on the role of gender, skill levels and job characteristics in determining different degrees of income stratification. Indeed, although the high heterogeneity among members of a same subgroup (within-group inequality) explains a large share of overall income inequality, the between-group inequality becomes significant in explaining the income differentials between employment status and occupation types.     

Income inequality and education revisited: persistence,endogeneity and heterogeneity

This article presents new results on the relationship between income inequality and education expansion – that is, increasing average years of schooling and reducing inequality of schooling. When dynamic panel estimation techniques are used to address issues of persistence and endogeneity, we find a large, positive, statistically significant and stable relationship between inequality of schooling and income inequality, especially in emerging and developing economies and among older-age cohorts. The relationship between income inequality and average years of schooling is positive, consistent with constant or increasing returns to additional years of schooling. While this positive relationship is small and not always statistically significant, we find a statistically significant negative relationship with years of schooling of younger cohorts. Statistical tests indicate that our dynamic estimators are consistent and that our identifying instruments are valid. Policy simulations suggest that education expansion will continue to be inequality reducing. This role will diminish as countries develop, but it could be enhanced through a stronger focus on reducing inequality in the quality of education.     

The effects of human capital composition on technological convergence

This paper empirically investigates whether the contribution of human capital to productivity growth depends on the composition of human capital and proximity to the technology frontier in a panel of 87 sample countries over the period 1970–2004. It tests the hypothesis that primary and secondary education is more suitable for imitation whereas tertiary education is more appropriate for innovation. The results show that the growth enhancing effects of higher education increase with proximity to the technology frontier only for high and medium income countries.     

人力资本与劳动力产业间流动

人力资本作为一种生产要素决定着产业的边际效率,在三次产业的劳动力间形成了收入差距,而收入差距又影响着劳动力在产业间的流动。同时,人力资本也影响着劳动力的流动性,人力资本含量越高,劳动力的流动性就越强。人力资本的城乡结构及其不同的积累方式决定了增加农村公共人力资本投资,能促进第一产业劳动力向二、三产业流动;城市人力资本能促进第二产业劳动力向第三产业流动,间接促进第一产业劳动力向二、三产业流动。