Testing Piketty S Hypothesis On The Drivers Of Income Inequality
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Testing Piketty’s Hypothesis on the Drivers of Income Inequality by Carlos Góes Pdf
Thomas Piketty's Capital in the Twenty-First Century puts forth a logically consistent explanation for changes in income and wealth inequality patterns. However, while rich in data, the book provides no formal empirical testing for its theoretical causal chain. In this paper, I build a set of Panel SVAR models to check if inequality and capital share in the national income move up as the r-g gap grows. Using a sample of 19 advanced economies spanning over 30 years, I find no empirical evidence that dynamics move in the way Piketty suggests. Results are robust to several alternative estimates of r-g.
Testing Piketty’s Hypothesis on the Drivers of Income Inequality by Carlos Góes Pdf
Thomas Piketty's Capital in the Twenty-First Century puts forth a logically consistent explanation for changes in income and wealth inequality patterns. However, while rich in data, the book provides no formal empirical testing for its theoretical causal chain. In this paper, I build a set of Panel SVAR models to check if inequality and capital share in the national income move up as the r-g gap grows. Using a sample of 19 advanced economies spanning over 30 years, I find no empirical evidence that dynamics move in the way Piketty suggests. Results are robust to several alternative estimates of r-g.
Author : George R. G. Clarke,Heng-fu Zou,Lixin Colin Xu Publisher : World Bank Publications Page : 32 pages File Size : 42,9 Mb Release : 2003 Category : Equality ISBN : 8210379456XXX
Finance and Income Inequality by George R. G. Clarke,Heng-fu Zou,Lixin Colin Xu Pdf
Although theoretical models make distinct predictions about the relationship between financial sector development and income inequality, little empirical research has been conducted to compare their relative explanatory power. Clarke, Xu, and Zou examine the relation between financial intermediary development and income inequality in a panel data set of 91 countries for the period 1960-95. Their results provide evidence that inequality decreases as economies develop their financial intermediaries, consistent with the theoretical models in Galor and Zeira (1993) and Banerjee and Newman (1993). Moreover, consistent with the insight of Kuznets, the relation between the Gini coefficient and financial intermediary development appears to depend on the sectoral structure of the economy: a larger modern sector is associated with a smaller drop in the Gini coefficient for the same level of financial intermediary development. But there is no evidence of an inverted-U-shaped relation between financial sector development and income inequality, as suggested by Greenwood and Jovanovic (1990). The results are robust to controlling for biases introduced by simultaneity. This paper--a product of Investment Climate, Development Research Group--is part of a larger effort in the group to understand the link between economic development and financial sector performance.
Health and the Income Inequality Hypothesis by Nick Eberstadt Pdf
Few would take exception to the proposition that an improvement in the material well-being of the poor would enhance not only their living standards but their health as well. A number of influential recent studies, however, purport to show that inequality in income -- not poverty per se -- is bad for people's health. This "inequality hypothesis" is meant to apply to everyone, regardless of wealth or social standing, and predicts that the risk of illness depends upon whether one lives in a society that is stratified or egalitarian. Thus, according to this hypothesis, while the poor may suffer the most from inequality, the better off and even the rich suffer as well. The enthusiasm many researchers and observers feel for this theory goes well beyond what might be justified by the evidence. The inequality hypothesis too often relies upon limited or unrepresentative data, hazily expounded causality, elementary econometric fallacies, and results that cannot be replicated. A very persuasive (although less publicly heralded) body of scholarship that challenges the inequality hypothesis is currently emerging. For example, by controlling for relevant variables -- such as household income, maternal characteristics, education, and race -- the relationship between income inequality and the health of infants and adults diminishes or disappears completely. This strongly suggests that income distribution is far less powerful a determinant of population health than the inequality hypothesis holds. Book jacket.
Inequality and Growth by Francesco Grigoli,Evelio Paredes,Gabriel Di Bella Pdf
The combination of stagnant growth and high levels of income inequality renewed the debate about whether a more even distribution of income can spur economic activity. This paper tests for cross-country convergence in income inequality and estimates its impact on economic growth with a heterogeneous panel structural vector autoregression model, which addresses some empirical challenges plaguing the literature. We find that income inequality is converging across countries, and that its impact on economic growth is heterogeneous. In particular, while the median response of real per capita GDP growth to shocks in income inequality is negative and significant, the dispersion around the estimates is large, with at least one fourth of the countries in the sample presenting a positive effect. The results suggest that the negative effect is mainly driven by the Middle East and Central Asia and the Western Hemisphere across regions, and emerging markets across income levels. Finally, we find evidence that improved institutional frameworks can reduce the negative effect of income inequality on growth.
Capital in the Twenty-First Century by Thomas Piketty Pdf
What are the grand dynamics that drive the accumulation and distribution of capital? Questions about the long-term evolution of inequality, the concentration of wealth, and the prospects for economic growth lie at the heart of political economy. But satisfactory answers have been hard to find for lack of adequate data and clear guiding theories. In this work the author analyzes a unique collection of data from twenty countries, ranging as far back as the eighteenth century, to uncover key economic and social patterns. His findings transform debate and set the agenda for the next generation of thought about wealth and inequality. He shows that modern economic growth and the diffusion of knowledge have allowed us to avoid inequalities on the apocalyptic scale predicted by Karl Marx. But we have not modified the deep structures of capital and inequality as much as we thought in the optimistic decades following World War II. The main driver of inequality--the tendency of returns on capital to exceed the rate of economic growth--today threatens to generate extreme inequalities that stir discontent and undermine democratic values if political action is not taken. But economic trends are not acts of God. Political action has curbed dangerous inequalities in the past, the author says, and may do so again. This original work reorients our understanding of economic history and confronts us with sobering lessons for today.
Causes and Consequences of Income Inequality by Ms. Era Dabla-Norris,Ms. Kalpana Kochhar,Mrs. Nujin Suphaphiphat,Mr. Frantisek Ricka,Evridiki Tsounta Pdf
This paper analyzes the extent of income inequality from a global perspective, its drivers, and what to do about it. The drivers of inequality vary widely amongst countries, with some common drivers being the skill premium associated with technical change and globalization, weakening protection for labor, and lack of financial inclusion in developing countries. We find that increasing the income share of the poor and the middle class actually increases growth while a rising income share of the top 20 percent results in lower growth—that is, when the rich get richer, benefits do not trickle down. This suggests that policies need to be country specific but should focus on raising the income share of the poor, and ensuring there is no hollowing out of the middle class. To tackle inequality, financial inclusion is imperative in emerging and developing countries while in advanced economies, policies should focus on raising human capital and skills and making tax systems more progressive.
World Inequality Report 2018 by Facundo Alvaredo,Lucas Chancel,Thomas Piketty,Emmanuel Saez,Gabriel Zucman Pdf
World Inequality Report 2018 is the most authoritative and up-to-date account of global trends in inequality. Researched, compiled, and written by a team of the world's leading economists of inequality, it presents--with unrivaled clarity and depth--information and analysis that will be vital to policy makers and scholars everywhere. Inequality has taken center stage in public debate as the wealthiest people in most parts of the world have seen their share of the economy soar relative to that of others, many of whom, especially in the West, have experienced stagnation. The resulting political and social pressures have posed harsh new challenges for governments and created a pressing demand for reliable data. The World Inequality Lab at the Paris School of Economics and the University of California, Berkeley, has answered this call by coordinating research into the latest trends in the accumulation and distribution of income and wealth on every continent. This inaugural report analyzes the Lab's findings, which include data from major countries where information has traditionally been difficult to acquire, such as China, India, and Brazil. Among nations, inequality has been decreasing as traditionally poor countries' economies have caught up with the West. The report shows, however, that inequality has been steadily deepening within almost every nation, though national trajectories vary, suggesting the importance of institutional and policy frameworks in shaping inequality. World Inequality Report 2018 will be a key document for anyone concerned about one of the most imperative and contentious subjects in contemporary politics and economics.
Understanding Poverty by Abhijit Vinayak Banerjee,Roland Benabou,Dilip Mookherjee Pdf
Understanding poverty and what to do about it, is perhaps the central concern of all of economics. Yet the lay public almost never gets to hear what leading professional economists have to say about it. This volume brings together twenty-eight essays by some of the world leaders in the field, who were invited to tell the lay reader about the most important things they have learnt from their research that relate to poverty. The essays cover a wide array of topics: the first essay is about how poverty gets measured. The next section is about the causes of poverty and its persistence, and the ideas range from the impact of colonialism and globalization to the problems of "excessive" population growth, corruption and ethnic conflict. The next section is about policy: how should we fight poverty? The essays discuss how to get drug companies to produce more vaccines for the diseases of the poor, what we should and should not expect from micro-credit, what we should do about child labor, how to design welfare policies that work better and a host of other topics. The final section is about where the puzzles lie: what are the most important anomalies, the big gaps in the way economists think about poverty? The essays talk about the puzzling reluctance of Kenyan farmers to fertilizers, the enduring power of social relationships in economic transactions in developing countries and the need to understand where aspirations come from, and much else. Every essay is written with the aim of presenting the latest and the most sophisticated in economics without any recourse to jargon or technical language.
Links Between Growth, Inequality, and Poverty: A Survey by Ms. Valerie Cerra,Mr. Ruy Lama,Norman Loayza Pdf
Is there a tradeoff between raising growth and reducing inequality and poverty? This paper reviews the theoretical and empirical literature on the complex links between growth, inequality, and poverty, with causation going in both directions. The evidence suggests that growth can be effective in reducing poverty, but its impact on inequality is ambiguous and depends on the underlying sources of growth. The impact of poverty and inequality on growth is likewise ambiguous, as several channels mediate the relationship. But most plausible mechanisms suggest that poverty and inequality reduce growth, at least in the long run. Policies play a role in shaping these relationships and those designed to improve equality of opportunity can simultaneously improve inclusiveness and growth.
Author : Stephen D. King Publisher : Yale University Press Page : 303 pages File Size : 52,9 Mb Release : 2018-05-22 Category : Business & Economics ISBN : 9780300240078
A controversial look at the end of globalization and what it means for prosperity, peace, and the global economic order Globalization, long considered the best route to economic prosperity, is not inevitable. An approach built on the principles of free trade and, since the 1980s, open capital markets, is beginning to fracture. With disappointing growth rates across the Western world, nations are no longer willing to sacrifice national interests for global growth; nor are their leaders able—or willing—to sell the idea of pursuing a global agenda of prosperity to their citizens. Combining historical analysis with current affairs, economist Stephen D. King provides a provocative and engaging account of why globalization is being rejected, what a world ruled by rival states with conflicting aims might look like, and how the pursuit of nationalist agendas could result in a race to the bottom. King argues that a rejection of globalization and a return to “autarky” will risk economic and political conflict, and he uses lessons from history to gauge how best to avoid the worst possible outcomes.
Rising Income Inequality by Chris Papageorgiou,Subir Lall,Florence Jaumotte Pdf
We examine the relationship between trade and financial globalization and the rise in inequality in most countries in recent decades. We find technological progress as having a greater impact than globalization on inequality. The limited overall impact of globalization reflects two offsetting tendencies: whereas trade globalization is associated with a reduction in inequality, financial globalization-and foreign direct investment in particular-is associated with an increase. A key finding is that both globalization and technological changes increase the returns on human capital, underscoring the importance of education and training in both developed and developing countries in addressing rising inequality.
The Race between Education and Technology by Claudia Goldin,Lawrence F. Katz Pdf
This book provides a careful historical analysis of the co-evolution of educational attainment and the wage structure in the United States through the twentieth century. The authors propose that the twentieth century was not only the American Century but also the Human Capital Century. That is, the American educational system is what made America the richest nation in the world. Its educational system had always been less elite than that of most European nations. By 1900 the U.S. had begun to educate its masses at the secondary level, not just in the primary schools that had remarkable success in the nineteenth century. The book argues that technological change, education, and inequality have been involved in a kind of race. During the first eight decades of the twentieth century, the increase of educated workers was higher than the demand for them. This had the effect of boosting income for most people and lowering inequality. However, the reverse has been true since about 1980. This educational slowdown was accompanied by rising inequality. The authors discuss the complex reasons for this, and what might be done to ameliorate it.
“Lopes brings his rigour, insight, and experience to this timely new book, presenting a compelling rethink of traditional development models in Africa and the need to seize on transformational change to build a sustainable future for the continent." —Kofi Annan, former United Nations Secretary General “Some readers will enjoy Lopes’ eclectic brilliance and breath-taking culture. Others will salute his ability to bring compelling new angles to every topic. Everyone will be impressed with his craftsmanship, his rich and multi-faceted approach to development, and his high ethical standards. It is impossible to read this jewel book and not feel smarter.” —Célestin Monga, African Development Bank’s Vice President and Chief Economist “Drawing on his distinguished academic career, policy experience at the highest level, and deep love of the continent, Lopes provides a visionary analysis of Africa's current problems and future prospects. This book provides a highly unusual combination of intellectualism and hard-nosed pragmatism. A singular achievement.” —Ha-Joon Chang, University of Cambridge, UK “Thorough, thought-provoking, and beyond rhetoric: definitely a must-read for anyone who wants to understand Africa’s present and future.” —Enrico Letta, former Prime Minister of Italy, Dean of the Paris School of International Affairs, Sciences Po, France Lopes delivers an overview of the critical development issues facing the African continent today. He offers readers a blueprint of policies to address issues, and an intense, heartfelt meditation on the meaning of economic development in the age of democratic doubts, identity crises, global fears and threatening issues of sustainability.
Inequality of Opportunity, Inequality of Income and Economic Growth by Mr.Shekhar Aiyar,Mr.Christian H Ebeke Pdf
We posit that the relationship between income inequality and economic growth is mediated by the level of equality of opportunity, which we identify with intergenerational mobility. In economies characterized by intergenerational rigidities, an increase in income inequality has persistent effects—for example by hindering human capital accumulation— thereby retarding future growth disproportionately. We use several recently developed internationally comparable measures of intergenerational mobility to confirm that the negative impact of income inequality on growth is higher the lower is intergenerational mobility. Our results suggest that omitting intergenerational mobility leads to misspecification, shedding light on why the empirical literature on income inequality and growth has been so inconclusive.