Does income inequality increase charitable giving?

Do households react to changes in the distribution of income in their localities by changing their charitable giving? The theoretical prediction of the effects of income inequality on giving is unclear. We study how changes in income inequality measured at the neighbourhood and municipality levels affect charitable giving by households in Canada between 1991 and 2006. We find that increases in inequality increase giving. Results are sensitive to the geographic dispersion of low‐ and high‐income households in neighbourhoods within a municipality. The effect on donations is smaller in areas with high levels of inequality at both neighbourhood and municipality levels.     

Does income inequality increase marginal propensity to consume?

This article empirically investigates the effects of income inequality on the marginal propensity to consume (MPC), using panel data of 22 OECD countries over the period 1994–2015. We find that MPC increases dramatically as income inequality increases. In subsample analyses, the MPC of a high inequality group is more than twice that of a low inequality group.     

Does farmer economic organization and agricultural specialization improve rural income? Evidence from China

This paper builds simultaneous equations model based on survey data of 2445 Chinese villages to do empirical analysis of the relationship among farmer economic organization, agricultural specialization and rural income. It finds that raising the level of agricultural specialization can improve rural income significantly, and the development of farmer economic organization is an effective way to raise the level of agricultural specialization; The factors, which affect whether farmers participating in farmer economic organization, are characteristics of farmers, situation of farmer economic organization and relevant policies promoting the development of farmer economic organization. Therefore, it has great significance to agricultural specialization and rural income growth for government to take measures to promote development of farmer economic organization.     

On the ambiguous economic freedom–inequality relationship

Previous research on the relationship between economic freedom and income inequality has produced mixed results. We provide a short survey of this literature, identifying potential causes for this empirical heterogeneity. Next, we replicate the results from two significant studies using six alternative measures of income inequality for an updated dataset of up to 112 countries over the period 1970–2010. Notably, we use the latest release of the Standardized World Income Inequality Dataset, which allows us to account for the uncertainty of the estimated Gini coefficients. We find that the results of previous studies are sensitive to the choice of country sample, time period and/or inequality measure used. We conclude with suggestions for future research in the area.     

Does microfinance affect income inequality?

This study addresses the question whether participation of the poor in microfinance contributes to reducing a country’s level of income inequality. Using data from 70 developing countries, we show that higher levels of microfinance participation are indeed associated with a reduction of the income gap between rich and poor people. We also show, however, that the effects of microfinance on reducing income inequality are relatively small. The results of this study add to the discussion on the impact of microfinance on poverty by showing that, although access to microfinance does seem to improve the relative income position of the poor, this improvement is modest, which is probably because the use of microfinance is generally small as compared to the size of the economy of the countries in our sample. Microfinance should, therefore, not be seen as a panacea for bringing down income inequality in a significant way.     

Do liberalization and globalization increase income inequality?

Using the Standardized World Income Inequality Database, we examine if the KOF Index of Globalization and the Economic Freedom Index of the Fraser institute are related to within-country income inequality using panel data covering around 80 countries 1970–2005. Freedom to trade internationally is robustly related to inequality, also when adding several control variables and controlling for potential endogeneity using GMM. Social globalization and deregulation is also linked to inequality. Reforms towards economic freedom seem to increase inequality mainly in rich countries, and social globalization is more important in less developed countries. Monetary reforms, legal reforms and political globalization do not increase inequality.     

Does consumption inequality track income inequality in Italy?

This paper presents stylized facts on labor supply, income, consumption, wealth, and several measures of consumption and income inequality drawn from the 1980–2006 Survey of Household Income and Wealth (SHIW) conducted by the Bank of Italy. The SHIW provides information on consumption, income and wealth, and a sizable panel component that allows econometricians to estimate sophisticated income, consumption, and wealth processes and to analyze labor market and portfolio transitions. We find that over the sample period income inequality is higher and has grown faster than consumption inequality. Most of the increase in income inequality is related to an increase in the degree of earnings' instability rather than to shifts in the wage structure. We suggest that, in particular, the labor market reforms of the 1990s and 2000s are the most plausible explanation of the increased earnings inequality.     

Does income inequality hinder economic growth? New evidence using Australian taxation statistics

Using taxation statistics, we first derive consistently defined Gini coefficients for the period 1942–2013 for Australia as a whole as well as its eight states and territories. While income inequality exhibited a downward trend until 1979, it has since been on the rise not only over time, but also across states and territories. We then proceed to examine the effect of inequality on economic growth after controlling for changes arising from investment in physical and human capital using available panel data across all states and territories (1986–2013). We find that inequality adversely affects economic growth with a couple of years delay, an outcome consistent with similar studies undertaken in the United States and Europe. Our findings suggest that policymakers can address rising income inequality by implementing measures that support, and enhance, human capital accumulation given its long-run economic and social benefits.     

Does foreign direct investment increase exports’ productivity? Evidence from developing and emerging countries

Raising the productivity content of exports is an important issue for developing and emerging countries. What role do foreign firms play in this process? This question has not been adequately studied. We contribute to the literature by generalizing the role of foreign direct investment (FDI) in the host country’s export productivity level. Using panel data, we present new empirical evidence suggesting that FDI boosts the overall productivity level of the developing and emerging countries’ exports.     

Does the relationship between income and child health differ across income groups? Evidence from India

This study explores the relationship between child health and socioeconomic status (health-income gradient) using the Indian Human Development Survey-II (2011-12) for children up to 5 years of age. Unlike previous studies our empirical analysis allows the gradient to vary across different income intervals using linear and cubic spline regressions. We use objective measure of child health - height-for-age Z-scores and find that an increase in income, on an average leads to reduction in prevalence of stunting. We also find differential effect of income on health across the income distribution with no effect of income on child health for very poor households. Further we explore underlying factors explaining the gradient and find that maternal health, housing quality, sanitation, non-infectious environment, media exposure to women and a safe neighbourhood are transmission channels that affect child health and together they explain almost 40% of the overall income effect. One of the major implication of our findings is that any policy to increase income of poor households should be complemented with a health policy designed specifically towards children as poor households are less likely to allocate additional income to child health.     

Does unconventional monetary policy affect inequality? Evidence from Japan

Inequality has been largely ignored in the literature and practice of monetary policy, but is gaining more attention recently. Here, we exclusively focus on the impact of unconventional monetary policy (UMP) on inequality. We look at how the recent UMP in Japan affected inequality, using household survey data. Our vector auto regression (VAR) results show that UMP widened income inequality after 2008Q3 as the Bank of Japan (BoJ) resumed its zero-interest rate policy and reinstated UMP. This is largely due to the portfolio channel. To the best of our knowledge, this is the first study to empirically analyse the distributional impact of UMP. Japan’s extensive experience with UMP may hold important policy implications for other countries.     

Does greater income inequality cause increased work hours? New evidence from high income economies

We explore the extent to which individual's allocation of time between labour and leisure is affected by the consumption standards of the rich. Utilizing a panel data methodology and panel Granger causality tests we investigate the relationship between income inequality and work hours for a cluster of 24 high-income OECD countries over the period 1990–2015. Four alternative measures of income inequality are considered. We find that greater income inequality is associated with longer work hours indicating stronger concern for conspicuous consumption rather than conspicuous leisure. Even though the resulting estimates lend support to the theoretical framework on consumption emulation, the generated evidence also appears to be in line with a Duesenberry's and Frank's expenditure cascading approach. The ambiguity however arising from the Granger Causality tests appears to lead – to a certain extent – to different conclusions about the direction of causality or whether a causal relationship does even exist. It is therefore imperative that caution should be exercised when interpreting the direction of the causal dimension.     

Does decentralization contribute to efficiency? Evidence from OECD countries

This article provides evidence on the relationship between fiscal decentralization and technical efficiency. We begin the first stage of this study with a data envelopment analysis to obtain technical efficiency estimates for a sample of 23 OECD countries over the period 1992–2009. In a second stage, we explore the effects of fiscal decentralization and other control variables on technical efficiency. The results including all the control variables reveal a statistically significant negative relationship between fiscal decentralization of public expenditure and technical efficiency.     

Immigration and economic freedom of the US states: Does the institutional quality of immigrants' origin countries matter?

When people immigrate to the United States from countries with less economic freedom, they do not dampen economic freedom in their destination states. We use the Economic Freedom of North America report to rate the economic freedom of US states, and we group immigrants by how far below the United States their origin countries score in the Economic Freedom of the World report. Our major findings hold true even when states receive immigrants from countries with far less economic freedom. Most relationships between immigration and the US states' economic freedom scores are neither statistically nor economically significant.     

Does price dispersion increase with quality? Evidence from the online diamond market

This article empirically investigates the relationship between price dispersion and price level. Searches seem more valuable for products of high quality, but buyers may have little incentive to search since such products are less frequently purchased. The extent of price dispersion is examined using a sample of around 160 000 diamonds offered for sale online. Estimates from a two-stage econometric strategy show that price dispersion increases significantly with quality. An explanation is that buyers of high-quality gemstones pay little attention to the price of these diamonds and even more so if they perceive high prices as signals of quality and rarity of the diamonds they intend to purchase.     

Are economic growth and the variability of the business cycle related? Evidence from five European countries

We use a long series of annual data that span over 100 years to examine the relationship between output growth and its uncertainty in five European countries. Using the GARCH methodology to proxy uncertainty, we obtain two important results. First, more uncertainty about output leads to a higher rate of growth in three of the five countries. Second, output growth reduces its uncertainty in all countries except one. Our results are robust to alternative specifications and provide strong support to the recent emphasis by macroeconomists on the joint examination of economic growth and the variability of the business cycle.     

Is there a trade-off between income inequality and corruption? Evidence from Latin America

In contrast to other research, lower corruption is associated with higher income inequality. This result is consistent with the idea that the corruption–inequality relationship may be different where there is a large informal sector, as in Latin America.