Income Growth and Earnings Variations in New Zealand, 1998–2004

This article analyses changes in the distributions of working‐age individuals' earnings and total income in New Zealand over the period 1998–2004. We find that there have been broad gains in income across the distribution, suggesting the spoils of growth have been shared widely. Mean and median earnings increased 15 and 23 per cent respectively, while mean and median income increased 12–13 per cent. Inequality, as measured by the Gini coefficient, was more stable: earnings inequality fell 4 per cent, while income inequality was unchanged. The main drivers of the changes were employment and real wage growth. We estimate that roughly one‐half of the growth in average incomes was due to employment growth, and one‐quarter each to demographic changes and wage growth. The relative employment and wage contributions varied across the income distribution: employment growth dominated gains at the lower end of the distribution, while wage gains dominated changes at the higher end.     

The role of the wage-productivity gap in economic activity

This paper argues that wages lagging behind productivity is a long-run structural phenomenon due to the interplay of wage dynamics and productivity growth. We call this interplay frictional growth, a term that can only be nullified in the utopian case of zero growth and/or no dynamics. In that vein, we challenge the prevailing view of the neutrality of the labour income share and investigate its impact on the evolution of employment. We thus estimate wage setting and labour demand equation systems – for France, Germany, Italy, Japan, Spain, the UK, and the US over the 1960–2008 period – and find that the labour share is negatively associated with employment even when the conventional assumption of a unitary long-run elasticity of wages with respect to productivity holds. Acknowledging the presence of the wage-productivity gap in both the short and long run, this work stands as the building block for assessing the effect of the falling labour share on economic activity. As recent work has shown that the widening wage gap is also an important factor prompting inequality, it can be argued that by supporting employment the falling labour share ‘sweetens’ the impact of rising income inequality, and, as such, deserves the attention of policy makers.     

林业重点工程对样本农户收入不平等影响的分解与分析

本文采用15个案例县的1995—2006年3 096个样本数据分析林业重点工程对农民收入不平等及其影响程度的作用机理。研究结果显示:(1)在1995—2006年的12年间,样本农户的收入结构发生了重大变化,林业重点工程补贴收入提高了8.03个百分点;(2)林业重点工程补贴收入对样本农户收入的基尼系数的贡献呈现上升态势,从1995年的0.330 7%上升到2006年的3.794 1%;(3)林业工程收入格局与国家工程区域规划有密切关系,工程政策的影响更为显著。因此,适当调整林业重点工程政策可以更好地实现农村扶贫的目标。     

Employment Patterns of Husbands and Wives and Family Income Distribution in Italy (1977–98)

The pattern of employment among men and women has changed remarkably over the past decades. The growth in the participation in the labor market of women with high-income husbands has heightened concerns that wives' earnings may increase income inequality among married couples, especially in countries like Italy, the U.K., and the U.S., where more noticeable growth of income inequality during the past decade has accompanied changes in employment levels. In this paper we attempt to measure the impact of the changes of women and men's employment patterns on the distribution of income among Italian households, by considering regional differences, using micro data from the Historical Archive of the Bank of Italy Survey of Household Income and Wealth (SHIW) for the period 1977–98. Our results indicate that total income distribution would have been more unequal without women's labor income.     

The puzzle on the causality of the productivity and employment growth: evidence from firm-level data

This article analyses the causality between the firm’s employment and productivity growth based on the population of manufacturing firms registered in Slovenia in the 1994–2003 period. By using the system GMM estimator, we show that the employment–productivity growth trade-off does not exist. Moreover, we find significant complementarities between employment and productivity growth, mostly driven by SMEs and firms from high-tech industries. Accordingly, we argue that the job-creation policy and productivity-promoting policy are complementary rather than trade-offs and that policymakers should focus on the optimal policy mix that provides the highest aggregate effect with regard to all growth aspects. Further, significant differences among the factors of employment and productivity growth suggest that job-creation policy measures are most successful when targeted at younger export-oriented firms with high total factor productivity levels and capital-intensive production. Meanwhile, the outcome of policy measures aimed at promoting productivity increases with a firm’s capital intensity and size up to the threshold employment level and with the intensity of market competition.     

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.     

Public sector employment and the distribution of income

In this paper a simple general equilibrium model is presented to examine the impact of three forces on the distribution of (labor) income: (i) changes in educational composition of the labor force; (ii) changes in productivity of different educational groups; and (iii) changes in the volume of public sector employment. A numerical illustration of the model based on observed and derived figures for the Netherlands suggests that the impact of a growing public sector on the distribution of income might very well be substantial, resulting into more inequality of income, while the combination of the other two forces has resulted in less inequality of income.     

The Uncertainty of Academic Rent and Income Inequality: The OECD Panel Evidence

The article presents an alternative view on the education—income inequality relationship, which calls into question the neoclassical claim that education increases labor productivity and hence contributes to a higher output, wage and consequently more even income distribution. In the context of public policies, education needs to be seen not only as a factor of income mobility, but also as a “positional good,” which benefits graduates at the expense of non-graduates. Education generates “academic rent,” by which we mean uneven remuneration of workers based on academic signs of distinctions that do not necessarily reflect differences in productivity. Using the robust panel model on a sample of OECD (Organization of Economic Co-operation and Development) countries from 1980 to 2015, we show that investments in human capital lead to lower inequality, but overinvestments tends to increase income inequality, which may be related to academic rent. In discussing this result, we consider that uncertainty of academic rent under the condition of a rapid transformation of the workplace caused by the fourth industrial revolution.     

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.     

INCOME INEQUALITY IN GERMANY DURING THE 1980s AND 1990s

The paper estimates a variety of inequality measures for three sub-samples of the German population using cross-sectional data on equivalent income from the German Socio-Economic Panel (GSOEP). The sub-populations under consideration are residents of West Germany including foreigners for the years 1984 to 1996, residents of East Germany for the years 1990 to 1996 and a comprehensive German population for the years 1990 to 1996. Bootstrap methods are applied to test whether changes in inequality are statistically significant. In order to account for panel attrition and over-sampling, sample weights are incorporated into the estimation procedure. The empirical results confirm the relative stability of the West German income distribution. While income inequality in West Germany has generally not altered in an economically relevant way over the period 1985 to 1996, inequality in East Germany has increased after reunification. Despite this increase, inequality remains substantially higher in the western part of the country. Convergence of eastern mean income to the western level generally overcompensated the rise in inequality in East Germany, so that the level of inequality in unified Germany is lower in 1996 than in 1990.     

THE DISTRIBUTION OF INCOME IN TRINIDAD AND TOBAGO, 1957–76*

This article describes what happens to income distribution during intensive changes in gross domestic product due to external market conditions. It deals specifically with an open market petroleum-based economy, Trinidad and Tobago, and reviews changes in national product and income levels and the income distribution pattern over the twenty year period 1957–76. The paper argues that during the period characterized by subperiods of steady growth and rapid growth in GDP (the latter associated with the petroleum price rise), income inequality increased between 1957 and 1972 and then decreased in the post petroleum-price-rise period of rapid growth 1973–76. While the effect of intensive changes in national product did trickle down to the lower income groups, income inequality in 1975–76 was greater than that existing in 1957–58. An examination of the spatial, occupational and temporal aspect of the distribution pattern points towards the elimination of structural dualism in the economy as the surest path towards greater income equality in Trinidad and Tobago.     

Factor Components of Inequality: A Cross‐Country Study

This paper uses data from the Luxembourg Income Study to examine some of the forces that have driven changes in household income inequality over the last three decades of the twentieth century. We decompose inequality for six countries (Canada, Germany, Norway, Sweden, the U.K., and the U.S.) into the three sources of market income (earnings, property income, and income from self‐employment) and taxes and transfers. Our findings indicate that although changes in the distribution of earnings are an important force behind recent trends, they are not the only one. Greater earnings dispersion has in some cases been accompanied by a reduction in the share of earnings which dampened its impact on overall household income inequality. In some countries the contribution of self‐employment income to inequality has been on the rise, while in others, increases in inequality in capital income account for a substantial fraction of the observed distributional changes.     

Explaining the increase in inequality during transition

This paper attempts to explain the increase in inequality that has been observed in all transition economies by constructing a simple model of change in composition of employment during the transition. The change consists of the 'hollowing-out' of the state-sector middle class as it moves into either the 'rich' private sector or the 'poor' unemployed sector. The predictions of the model are contrasted with the empirical evidence from annual household income surveys from six transition economies (Bulgaria, Hungary, Latvia, Poland, Russia and Slovenia) over the period 1987-95. We find that the most important factor driving overall inequality upwards was increased inequality of wage distribution. The non-wage private sector contributed strongly to inequality only in Latvia and Russia. Pensions, paradoxically, also pushed inequality up in Central Europe, while non-pension social transfers were too small everywhere and too poorly focussed to make much difference.     

Why Did Income Inequality in Germany Not Increase Further After 2005?

While income inequality in Germany considerably increased in the years before 2005, this trend stopped after 2005. We address the question of what factors were responsible for the break in the inequality trend after 2005. Our analysis suggests that income inequality in Germany did not continue to rise after 2005 for the following reasons. First, we observe that the general rise in wage inequality that explained a lot of the inequality increase before 2005, became less steep (but did not stop) after 2005. Second, despite further increases in wage inequality after 2005, inequality in annual labour incomes did not increase further after 2005 because increased within‐year employment opportunities compensated otherwise rising inequality in annual labour incomes. Third, income inequality did not fall in a more marked way after 2005 because also the middle and the upper part of the distribution benefited from the employment boom after 2006. Finally, we provide evidence that the effect of a wide range of other factors that are often suspected to have influenced the distribution such as capital incomes, household structures, population ageing, changes in the tax and transfer system and the financial crisis of 2008 did not significantly alter the distribution after 2005.     

The evolution of income inequality in the European Union during the period 1993–1996

The objective of this work is to analyse the income inequality in the 15 EU countries during the convergence process to the Monetary Union, using the information contained in the European Community Household Panel, corresponding to the four first waves. Using the inverse second order stochastic dominance concept, an ordering of these countries has been carried out. Furthermore, this ranking allows one to determine if the differences among EU country members have increased or decreased during this particular period. Whether the inequality of income has diminished within and between countries over time was studied. Gini's generalized family indices proposed by Donaldson and Weymark (Journal of Economic Theory 22: 67–86, 1980 and 29: 353–8, 1983) and Yitzhaki (International Economic Review 24: 617–28, 1983) have been used. This allows one to test the sensitivity of the results obtained to different degrees of inequality aversion and to different equivalence scales, taking into account household sizes.     

The microfoundation of macroeconomic populism: The effects of economic inequality on public inflation aversion

Previous work on the politics of monetary policy has focused on the role of distributive motives stemming from individual characteristics such as income or factoral/sectoral interests in citizens' formation of monetary policy preferences. However, the existing literature has paid little attention to how a country's overall distributive context, namely, its level of economic inequality, affects citizens' preferences vis-à-vis price stability and employment. This article argues that as inequality pushes more citizens below a society's average income, there is more demand for redistribution through higher employment and increased fiscal spending, each of which can be better supported by expansionary monetary policy. This means that inequality makes citizens more tolerant of inflation. This study uses the International Social Survey Program, the Integrated Values Surveys, and the Comparative Study of Electoral Systems, which together include 293,100 respondents from 53 countries between the years 1976 and 2016 to demonstrate that overall, inequality significantly moderates citizens' inflation aversion.     

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.     

Sources of Inequality Between Male and Female Wages in Australia

This article examines the influence of labour force status, full-time/part-time employment status, educational qualifications, work experience, and occupation as sources of inequality between male and female wages in Australia. A decomposition method is used to identify the effect of these factors on male/ female inequality. This strategy involves successively removing persons who differ with respect to each of these factors from the population under study and then decomposing the inequality in the remaining sub-population into inequality within each sex and inequality between the sexes. This decomposition is done using the I₀ inequality index proposed by Theil (1967). The study is based on unit record data from the 1981–82 Income and Housing Survey conducted by the Australian Bureau of Statistics. It finds that a significant proportion of the inequality between the wages of the sexes can be explained by their differences with respect to the factors listed above.     

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.     

On the Persistence of Labour Market Insecurity and Slow Growth in the US: Reckoning with the Waltonist Growth Regime

In this article I systematically incorporate empirical work on rising income inequality and wage stagnation into a regulation theoretic framework for analysing macroeconomic growth. The rise of job polarisation and income inequality coincides with a long period of macroeconomic stagnation, both continuing through to the present (with the exception of a brief period of strong growth and declining inequality in the second half of the 1990s). The corporate scramble to restore profit rates after the crisis of Fordism has transformed the institutional configuration of the political economy. In particular, institutions supporting upward mobility and middle-class incomes in the economy have been eroded by the twin forces of internationalisation (leading to the re-emergence of wage-based competition) and employment externalisation (outsourcing, downsizing, antiunionism, etc). The current growth regime, which may be characterised as Waltonist, based on the Wal-Mart model of buyer-driven global supply chains focused on cutthroat wage-based competition and deunionisation, is not transitional but rather embedded in apparently long-term institutional settlements that amount to a dysfunctional regime.