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This paper focuses on the widening wage inequality between skilled and unskilled workers within countries and discusses whether trade and technology have contributed to this trend. The paper develops an analytical framework for wage inequality that traces the determinants and their relative roles in wage inequality in different stages of the development of trade theory, especially those considering new evidence after 2011. We find that technology plays a key role in the rise of wage inequality in most countries, while trade plays an increasingly crucial and more complex role in recent years. Skill supply institutions, such as education systems supplying skilled labour or unions participating in wage‐setting processes, suppress the rise of wage inequality in some countries. The paper further outlines the mechanisms through which trade affects wage inequality, including offshoring, firm heterogeneity, labour market frictions and global value chains. We find that trade has indirect effects on technology, which further enlarges the wage inequality among skills. The paper also discusses the policy implications of the impacts of trade and technology on wage inequality. [ABSTRACT FROM AUTHOR]

Copyright of Regional Science Policy & Practice is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The main aim of this paper is to examine the threshold impact of financial development and trade liberalization on income inequality as a measure of sustainable development in a sample of developed and developing countries using panel threshold analysis. Two major dimensions of financial development are considered: liquid liabilities and stock market capitalization. The empirical results revealed that financial development reduces income inequality only in countries where their GDP per capita is above ~US$11,000. It has no significant impact in reducing inequality in developing countries. This implies that institutional reforms in less developed and developing countries are necessary in order to reap the gains from financial development. Trade liberalization is found to have a positive impact on income inequality for both country groups—that is, trade benefits have worsened the income distribution. [ABSTRACT FROM AUTHOR]

This paper discusses how the structure of the tax system affects its progressivity. It suggests a measure of progressive capacity of tax systems, based on the Kakwani index, but independent of pretax income distributions. Using this and other progressivity measures, the paper (i) documents a decline in progressivity over the last decades and (ii) examines the relationship between progressivity and economic growth. On this relationship, regressions do not reveal a significant impact, suggesting that efficiency costs may be small – at least for degrees of progressivity observed in the sample. Finally, the paper finds that increasing tax progressivity reduces pretax inequality. [ABSTRACT FROM AUTHOR]

This paper surveys developments in the literature on trade and inequality over the past decade. I first discuss the impact of trade on nominal income inequality, with a focus on firm heterogeneity and the role of mobility frictions. Then, I provide an overview of the literature on the redistributional role of government in an open economy. Finally, I assess the current state of studies on how trade affects real income inequality through the expenditure channel. [ABSTRACT FROM AUTHOR]

Abstract: In this paper we construct a general equilibrium model of trade and illustrate that return to unskilled labor may be negatively correlated with the price of product it produces. Specifically, we show that greater protection for the intermediate good that uses “unskilled” labor can reduce the unskilled wages. This result has interesting political‐economic implications. [ABSTRACT FROM AUTHOR]

Abstract: The high level of debt among households outside the top end of the income distribution has led many economists to assert that household debt has been an important component of the increase in income inequality in the United States. In addition, the yield spread provides information about the overall condition of the economy and may also be tied into the distribution of income. The paper's results show that increases in the yield spread and household debt correspond with increases in top income shares, resulting in increases in income inequality. However, as household debt and income inequality increase, the yield spread contracts, which suggests future economic contraction. Thus, rising inequality may signal future economic weakness. [ABSTRACT FROM AUTHOR]

Despite economic growth since the recession, the gap between the richest and the poorest segments of the population remains one of the most pressing concerns of contemporary America. This paper uses IR-95/20, IR-80/20, and IR-65/35 ratios to measure the income divides between the richest and the poorest segments in the mid-to-large-sized metropolises of the U.S. Southeast, their variation across ethnicities, and their association with metropolitan level attributes such as diversity, segregation, socio-economic, and other built-environment, and labor characteristics. The income divide ratios serve as the dependent variables whereas principal components along with state-dummy variables serve as the explanatory variables in regressions analyses. The metropolises that are large, diverse, and better educated are the most income-divided whereas those with lower educated people are less divided. Metropolises with larger shares of their labor engaged in primary sectors of economy have higher income divides; this observation also holds true for African Americans and Hispanics. Metropolises that gained in intermixing during 2000-2014 are associated with a lower income divide and vice versa. [ABSTRACT FROM AUTHOR]

This paper constructs a two-sector growth model with heterogeneous labour, to explore the impact of the economic integration on growth and income distribution. There are two sectors in each country, including the consumption-good sector and the R&D sector. We suppose that the R&D sector produces new blueprints or ideas for these innovations, and hence provides the engine of growth. Assume that the talent's distribution of workers is the uniform distribution. We show that the economic integration will stimulate the developing countries' economic growth and then decrease its income inequality. In addition, we also demonstrate that if the growth rate of the advanced country rises after the integration, then income inequality of that will increase, and vice versa. [ABSTRACT FROM AUTHOR]

This paper examines spatial income inequality and convergence in the Philippines—a lower middle‐income country with historically high inequality—and its course over the process of economic development. Combining higher quality nighttime lights (NTLs) with gridded population data, I construct subnational measures of spatial inequality for the 17 administrative regions in the country in the period 2000–2020. Using this unique dataset, I first document the tremendous improvement in income disparities over the last two decades. Income per capita across provinces has converged rapidly, and income dispersion within administrative regions has narrowed markedly. Then, I uncover a U‐shaped relationship between spatial inequality and economic development, which is robust; across alternative measures of inequality; to the outlier effects of highly urbanized cities; across parametric and semiparametric specifications; to business‐cycle effects; and to persistence of spatial inequality. Finally, I confirm that structural transformation acts as a transmission channel of this U‐shaped link. [ABSTRACT FROM AUTHOR]

This paper introduces a model in which greater inequality reduces growth in economies with low levels of financial development but that this effect is attenuated in economies with more developed systems. The model also predicts that individuals in economies with developed financial markets have a higher tolerance to inequality. Using a panel dataset that covers a large number of countries, this paper shows empirical evidence that is consistent with the main predictions of the model. Overall, this paper's major findings highlight that some of the pernicious effects of inequality can be attenuated by improving access to credit. [ABSTRACT FROM AUTHOR]

Along the path of economic development, advancement of some groups naturally generates economic disparity in society. The concurrent presence of both winners and losers invariably give rise to the psychologically economic question of how the losers perceive and respond to the benefits of development. The 'tunnel effect' proposed by Hirschman provides valuable insights for understanding the changing tolerance of economic inequality in the process of economic development. This paper critically discusses this proposition, reviews the related literature, and provides possible extensions. © 2018 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

The multilateral trading system, first established formally in 1947 with the goal of bringing about sustainable peace and greater prosperity through increased cross‐border commerce underpinned by globally agreed upon rules, has contributed significantly to economic development and reduced poverty. However, as the global trading system enters the 2020s it cannot rely on past success and must adapt to a rapidly changing world, one that requires both more and different kinds of inclusion in order to address new challenges around inequality and global economic and geopolitical shocks. To address these new challenges the World Trade Organization (WTO) must be updated and reformed by its member governments, who must also recognise that many current global challenges have linkages across trade, tax, environment, and health areas which require increased coordination across global bodies. Further, the challenges of growing domestic inequality in many countries, while a domestic policy concern, will have significant impact on the political will to undertake the necessary updating and reform of the multilateral trading system and the required enhanced coordination with other international bodies and agreements. The recent positive outcomes from the WTO's 12th Ministerial Conference in June of 2022 show that global cooperation on trade issues is possible. Building on this success, the WTO can reshape itself to be fairer and more resilient and better able to address current global and domestic challenges. [ABSTRACT FROM AUTHOR]

Abstract: This paper explores the matrix demand multiplier in Sraffian frameworks and shows that it involves an autonomous demand‐transfer payments curve, which exhibits formal similarities with the well‐known consumption (wage)‐growth (profit) curve in steady‐state capital and growth theory. [ABSTRACT FROM AUTHOR]

One potential consequence of rising top‐income concentration is borrowing by less‐affluent households attempting to maintain relative living standards. This paper evaluates the “keeping up with the Joneses” phenomenon, examining the responsiveness of payment‐to‐income ratios for different debt types across the income distribution to changes in income among affluent households. The analysis provides evidence for the responsiveness of debt to rising top incomes. Middle‐ and upper‐middle‐income households take on more housing‐related debt and have higher payments in places with higher top‐income levels. Among lower‐income households non‐mortgage borrowing and debt payments decline, consistent with restrictions in the supply of credit. (JEL D63, D14) [ABSTRACT FROM AUTHOR]

Abstract: This paper analyses how the functional components of public expenditure and spending‐driven consolidations affect the economic growth, unemployment, and income inequality. A dynamic panel data least squares dummy variable estimator estimator is employed over a sample of 15 European Union countries during the period 1990–2012. The empirical results show that real GDP growth decreases when fiscal austerity measures are implemented, especially if they are spending‐driven. Cuts in public expenditure undermine economic growth, namely if they slash spending on public order, recreation, and education. Spending cuts on education, in particular, affect the investment in human capital, harming not only growth but also economic, social, and human development. The unemployment rate also proved to be significantly boosted when austerity measures restrict spending on education, whereas income inequality rises when social protection expenditures are cut. [ABSTRACT FROM AUTHOR]

In this paper we reconcile, both theoretically and empirically, changes in cross-sectional inequality with patterns of panel income changes during periods of economic growth and decline. Using panel earnings data from Mexico, we find that the panel changes are convergent in almost every period, the reason being that a large number of individuals experience small convergent earnings changes while a small number of individuals experience large and convergent earnings changes. We examine what accounts for the inequality of log-earnings at a point in time and for the inequality of the log of earnings averaged over five quarters. We find that the equalization brought about by panel earnings changes is mainly associated with changes in employment status and in sector of employment and not by personal characteristics such as schooling, age, and gender. [ABSTRACT FROM AUTHOR]

The Theil indices (Theil, ) are widely used measures for studying the degree of concentration and inequality in size income distributions. Their property of decomposability makes these indices especially useful in applied economic analysis. This paper is a synthetic review of the Theil indices for the most important and popular parametric income distributions. Extensions to higher dimensions are sketched. [ABSTRACT FROM AUTHOR]

The EU-wide survey ' Statistics on Income and Living Conditions' ( EU- SILC) is extremely important for international social science research and policy advice. It is therefore crucial to ensure that the data are of the highest quality and international comparability. This paper is aimed at identifying unexpected developments in income levels, income mobility, and inequality in the EU- SILC data between 2005 and 2009. We examine the consistency of EU- SILC by comparing cross-sectional results with findings based on two-year longitudinal samples. Although the data represent similar populations, for several countries the results of this comparison differ widely. One important outcome is the high degree of variability over time in countries that obtain their income information from register data. This suggests methodological challenges in the clear designation of new subsample members, in the reweighting of the data, in imputation of missing values, and in other areas. [ABSTRACT FROM AUTHOR]

The objective of the paper is to verify if income inequality impedes the growth rates in OECD countries in the period of 1990–2014 and to reveal whether the choice of the income inequality measure determines the sign and the strength of the estimated relationship. We use system GMM to estimate parameters of a dynamic panel growth model. The research indicates that income inequality negatively affects economic growth. We also find evidence that various measures of inequality bring the different scale of consequences for economic growth, with measures that give more weight to the middle part of the distribution being the weakest predictor of GDP growth. Simultaneously, we present the test of weak instruments, which helps to explain these differences. [ABSTRACT FROM AUTHOR]

This paper investigates the shape of the relationship between household income inequality and economic growth. More precisely we search for the existence of threshold values in this relationship by employing a dynamic panel smooth transition regression model to account for potential endogeneity problems. We find that there do exist threshold values (that are different for different groups of countries): below the threshold, household income inequality is growth enhancing, while above the threshold, inequality has a negative or no effect on economic growth. [ABSTRACT FROM AUTHOR]

Secular discourse about problem of economic inequality rests on two foundational premises that are problematic from a theological point of view. First, individuals enter into society with the aim of bettering their own condition. Second, bettering one's own condition entails accruing more wealth and power so that one can fulfill more of one's desires. In this paper I argue that insofar as these premises shape market behavior, they actively promote excessive economic inequality. Ethical responses to the problem of economic inequality that do not challenge these assumptions are unlikely to effectively promote justice. A theological response to the problem of economic inequality should work to promote cultural change by reminding us that genuine human flourishing depends on communal ties and the higher human goods that material wealth is properly meant to support. [ABSTRACT FROM AUTHOR]

ABSTRACT Motivated by the empirical evidence on endogenous labor effort and wage differentials, this paper explores implications for distribution and growth of firms using different strategies to elicit effort from workers. The frequency distribution of effort-elicitation strategies across firms is governed by a replicator dynamic that generates wage differential as a long-run equilibrium. Although firms willing to elicit more effort have to compensate workers with a higher wage rate, a larger proportion of firms adopting such strategy will not necessarily produce a higher wage share and thereby a higher growth rate. The intuition is that, depending on the accompanying rise in labor productivity, the wage share may not vary positively with the proportion of firms paying higher wages. [ABSTRACT FROM AUTHOR]

Copyright of Papers in Regional Science is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Inclusive economic development has become a pressing goal of government policy in India in the face of rising regional inequality. This paper examines the role of targeted development policy action in inducing economic growth and also in reducing regional income inequality during the last two decades (since the beginning of the 1990s)-a period marked by increasing trade openness. In our disaggregated analysis of the states, we find that while the government capital expenditure policy has had significant positive impact on output growth of the poorer states, it failed to break the trend of escalating regional inequality. The policy has been significantly more effective in enhancing manufacturing sector output in the poorer states compared with the richer states. On the trade front, while the poorer states gained somewhat in income growth from greater openness, the gains were not large enough to offset the increasing regional disparity. [ABSTRACT FROM AUTHOR]

This paper evaluates the impact of human capital endowments on measured inequality in Cameroon. We first estimate determinants of household economic well-being ( HEW) in which human capital endowments are considered as endogenous effort-related regressors, while controlling for exogenous circumstance-related variables. Second, we simulate alternative counterfactual distributions of HEW: one in which human capital endowments are equalized; and the other in which variations are entirely attributable to the unobservable terms. Finally we compare inequality in the factual distribution of household well-being with inequality in each of the simulated distributions. Direct and indirect exogenous opportunity-inducing circumstances are inequality-augmenting, whereas human capital endowments are inequality-reducing in the actual distribution. Education and health interventions will ameliorate well-being and mitigate inequality. Thus, leveling the playing ground for individuals to have equitable exposure to education, health and labor market participation is required for a low-income country like Cameroon to enhance equity and sustainable household economic growth. [ABSTRACT FROM AUTHOR]

In this paper, we have presented the patterns of inequality, growth and income inequality in the MENA region. Using a cross-sectional time series data of MENA countries for the period 1985-2009, we have also investigated the effect of income inequality on key societal development, namely economic growth and poverty, in the region. Our empirical results show that income inequality reduces economic growth and increases poverty in the region. Other factors having significant negative effect on economic growth in the MENA region include previous growth rate, exchange rate, government consumption expenditure or government burden, initial per capita GDP, inflation and primary education. On the other hand, variables positively and significantly associated with MENA's economic growth are domestic investment rate, urbanization, infrastructure development, and mineral rent as a percentage of GDP. In addition, apart from income inequality, other factors increasing poverty in the region are foreign direct investment, population growth, inflation rate, and the attainment of only primary education. Poverty-reducing variables in the region include domestic investment, trade openness, exchange rate, income per capita, and oil rents as a percentage of GDP. [ABSTRACT FROM AUTHOR]

The issue of income inequality in the People's Republic of China (PRC) has attracted world-wide attention, leading to a sizable literature. This paper attempts to provide a nonexhaustive literature review of the PRC's inequality trends and determinants, and suggested government interventions. It discusses profiles of income inequality along three dimensions: interhousehold disparity, regional divides, and urban-rural gaps. This is followed by an exploration of the driving forces behind rising inequality, including the notorious hukou system, policy biases, location or geographic factors, globalization, and education. Finally, the paper summarizes and proposes government interventions for containing or reducing income inequality in the PRC. Important areas for future research are also suggested in the final section of the paper. [ABSTRACT FROM AUTHOR]

Both policymakers and economists have tried to find criteria to assess whether economic growth is pro‐poor. In this paper we reconsider the inequality‐oriented approach originally proposed by Jenkins and Van Kerm. They look at the changes in the whole income distribution, and decompose the change in income inequality, measured by the Gini coefficient, into a progressivity and a reranking component. They define a pro‐poor (or progressive) change as one where the changes in income are more to the benefit of those who are initially poor than to the benefit of those who are initially rich. We challenge this assumption, and maintain that also the point of view of the finally poor and the finally rich should be taken into account when evaluating whether growth is pro‐poor. We suggest a new decomposition method, based on an inequality index of the generalized entropy family, which allows the change in income inequality to be decomposed exactly into a forward‐looking and a backward‐looking progressivity component. Our empirical illustration, using data from household surveys in Vietnam, shows that economic growth in Vietnam has been pro‐poor from a forward‐looking perspective, but not from a backward‐looking perspective. [ABSTRACT FROM AUTHOR]

Summary: Different economic growth episodes display very different distributional characteristics, both across countries and over time. Growth is sometimes accompanied by rising and sometimes by falling inequality. Applied economists have come to rely on the growth incidence curve, which gives the quantile‐specific rate of income growth over a certain period, to describe these differences. This paper introduces a mean‐independent analogue, the delta Lorenz curve, which gives the cumulative change in income share up to each quantile. We also develop estimation and inference procedures for both functions of quantiles. We establish the limiting null distribution of the test statistics of interest for those functions, and propose resampling methods to implement inference in practice. The proposed methods are used to compare the growth processes in the USA and Brazil during 1995–2007. Although growth in the average real wages was disappointing in both countries, the distribution of that growth was markedly different. In the USA, wage growth was mediocre for the bottom 80% of the sample, but much more rapid for the top 20%. In Brazil, conversely, wage growth was rapid below the median, and negative at the top. Wage shares fell in the USA up to the 83rd percentile, and rose in Brazil up to the 65th percentile. [ABSTRACT FROM AUTHOR]

This paper reviews how income inequality at the micro and regional levels influenced the inequality in educational outcomes for children and adolescents in China over the past decades. First, we find that the economic condition of the family influences children's and adolescents' education through home educational resources and parental involvement. Second, income disparity is significantly correlated with the regional differences in educational outcomes. Finally, the differences in the development of child and adolescent education between different regions are mainly due to the uneven distribution of educational resources, which is closely related to the public education financing system and local economic development. [ABSTRACT FROM AUTHOR]

This paper proposes a simple algorithm based on a matrix formulation to compute the Foster and Wolfson bipolarization index and then to decompose it by income sources. An empirical illustration based on EU‐SILC data for the years 2007 and 2014 shows the usefulness of the proposed decomposition. [ABSTRACT FROM AUTHOR]

From a regional entrepreneurial ecosystem perspective, we theoretically interpret and empirically testify the mutual promotions between inclusive finance, entrepreneurship, and development. To do so, a two‐period overlapping generation model is introduced to interpret the mechanism, and then a panel vector auto‐regression model based on 31 provinces (and municipalities) in China from 2005 to 2016 is constructed. We find that: (a) Due to the development‐promoting ability, self‐reinforcing ability and multiplying effect, it is possible and worthy to construct a sustainable developing system. (b) However, an insufficient human capital endowment might be a critical obstacle, which is revealed as a precondition of this sustainable system. (c) Moreover, it is necessary to promote sustainable development of financial inclusion and entrepreneurship, due to the lack of directly promoting effect from economic development. (d) Thus, governmental complement is indispensable because of polarization led by the endowed wealth gap, and continuous promotion is appealed due to the transforming lag of mutual promoting feedback. [ABSTRACT FROM AUTHOR]

Abstract: Using data on 48 contiguous U.S. states and a spatial econometric approach, this paper examines short‐ and long‐run effects of productive higher education and highway infrastructure spending financed by different revenue sources on state economic growth. Following the Lagrange Multiplier, Wald, and Likelihood Ratio tests, the data are found to be characterized by both spatial lag and spatial error processes, leading to the estimation of a dynamic spatial Durbin model. By decomposing results of the dynamic spatial Durbin model into short‐ and long‐run direct as well as indirect (spillover) effects, we show that accounting for spillover effects provides a more comprehensive approach to uncovering the effects of productive government spending on growth. We find that, regardless of the financing source, productive higher education and highway spending have statistically significant short‐ and long‐run direct as well as spillover effects on state income growth. [ABSTRACT FROM AUTHOR]

This paper analyses the relationship between mean income and the income of the rich. Our methodology closely follows that of Dollar and Kraay ( Journal of Economic Growth, 2002, 7, 195), but instead of looking at the bottom of the distribution, we focus on the top. We use panel data from the World Top Incomes database, which collects top income data from several countries using tax returns as the raw source. We define the 'rich' as earners in the top 10%, 1%, 0.1% and 0.01% of the income distribution. Using data since 1980, we find that economic growth is good for the rich in the sense that the mean income of the top decile of the distribution grows in the same proportion as that of the whole population. However, we also find that the income of earners in the top percentile of the distribution and above grows faster than average income: therefore, economic growth is really good for the really rich. We also find that during economic downturns the average income of top earners responds proportionally less to changes in mean income than during economic expansions. Our results are consistent with the increase in inequality that has been recently observed at the top part of the distribution in many countries, and they are robust to different specifications, country samples and time observations. [ABSTRACT FROM AUTHOR]

This paper surveys the last two and a half decades of non-neoclassical literature on endogenous technical change and the functional income distribution. We distinguish between classical-Marxian and post-Keynesian models, and analyze them under three different assumptions on the determinants of technical change: capital accumulation, income distribution, and labor market tightness. The balanced growth implications of alternative models are compared with neoclassical exogenous and endogenous growth theories. Despite the strong differences in the assumptions regarding the substitutability between capital and labor, the role of different classes in society, and whether or not productive factors are fully employed, the various alternative models can be classified in a way that highlights remarkable similarities with their neoclassical counterparts. Both neoclassical and alternative theories of endogenous growth: (i) have shown that long-run growth is sensitive to investment decisions, and (ii) rely on a linear spillover from the stock of knowledge to the production of innovations. The comparison highlights the different channels emphasized by competing theories: saving behavior and market structure in the neoclassical theories, as opposed to income distribution, the state of the labor market, and investors' behavior in alternative theories. [ABSTRACT FROM AUTHOR]

Using panel data of 23 provinces during the period 1996-2012, this paper investigates the impacts of financial development and structure on income inequality in different administrative districts (urban, rural and overall) in China. The results produced by the dynamic generalised method of moments estimator provide some evidence for a linear and inverse 'U-shape' relationship between financial development and income inequality, and increasing the relative importance of financial markets to banks helps to reduce income inequality. Furthermore, the results of panel threshold regressions show that the benefits of financial development only occur if the stock market activity has reached a threshold level and disappear if the stock market capitalisation has reached a certain scale. Meanwhile, the impact of the financial structure weakens as the financial development expands and the proportion of financial markets increases. We also find that the impacts of financial development and structure on rural income inequality are stronger than those on urban income inequality. [ABSTRACT FROM AUTHOR]

This article examines the developer's dilemma—a seeming quandary emerging from the fact that developing countries simultaneously pursue two different developmental goals: (a) seeking economic development through structural transformation and (b) reducing income inequality. However, the proclivity of increasing income inequality while pursuing structural transformation is often referred to as the developer's dilemma. This study investigates for the presence of this dilemma in Africa using sample splitting and threshold estimation technique. While we find support for the existence of a developer's dilemma, suggesting that structural transformation induces income inequality, the income inequality‐widening effect is disproportionate. [ABSTRACT FROM AUTHOR]

'Business climate indexes' characterize state economic policies, and are often used to try to influence economic policy debate. However, they are also useful in research as summaries of a large number of state policies that cannot be studied simultaneously. Prior research found that business climate indexes focused on productivity and quality of life do not predict economic growth, while indexes emphasizing taxes and costs of doing business indicate that low-tax, low-cost states have faster growth of employment, wages, and output. In this paper, we study the relationship between these two categories of business climate indexes and the promotion of equality or inequality. We do not find that the productivity/quality-of-life indexes predict more equitable outcomes, although some of the policies underlying them suggest they might. We do find, however, that the same tax-and-cost-related indexes that are associated with higher economic growth are also associated with increases in inequality. [ABSTRACT FROM AUTHOR]

Using a structural model and a large panel dataset for 150 developed and developing countries covering the period 1970-2009, the present paper examines the potential tradeoff between economic growth and income inequality in the design of tax structure. We find clear evidence of: (i) a tradeoff between growth and inequality for both direct and indirect taxes; (ii) heterogeneous growth and inequality effects of tax instruments measured by levels and rates (particularly corporate income tax); and (iii) heterogeneous effects of tax instruments on different definitions of inequality (i.e. gross income, net income or expenditure). [ABSTRACT FROM AUTHOR]

A number of recent studies claim that when properly computed, factor income shares across countries at different levels of development are essentially uniform. This note evaluates the methodology behind such findings and offers estimates using newly available data. The results for a group of 55 developed, developing, and transition economies for the period 1990-2008 lead us to reject the hypothesis of factor share convergence. [ABSTRACT FROM AUTHOR]

While much of the research on child labor focuses on household level factors, macroeconomic factors, such as globalization, have gained increasing attention. This paper contributes to the literature on the role of globalization in child labor by examining a specific aspect of globalization, namely social globalization. The results of the empirical analysis indicate that social globalization does have a significant negative impact on the average incidence of child labor in the cross-country sample of developing countries. This contrasts with the existing literature on economic globalization and child labor, where, in many cases, no significant effect is found. [ABSTRACT FROM AUTHOR]

Income differences arise from many sources. While some kinds of inequality, caused by differential rewards to effort, might be associated with faster economic growth, other kinds, arising from unequal opportunities for investment, might be detrimental to economic progress. This study uses two new datasets, consisting of 117 income and expenditure household surveys and 134 Demographic and Health Surveys, to revisit the relationship between total inequality and economic growth. In particular, we ask whether inequality of opportunity, driven by circumstances at birth, has a negative effect on subsequent growth. Using the income and expenditure micro dataset, we find that while both total income inequality and inequality of opportunity are negatively associated with growth, the coefficient estimates are insignificant. The evidence is similarly equivocal using the Demographic and Health Surveys data. On balance, the data do not provide support for the hypothesis that inequality of opportunity is bad for growth. [ABSTRACT FROM AUTHOR]

Abstract: Assuming an inelastic labor supply, existing studies show that a larger country has a higher wage rate and a higher individual income. We reexamine these results using a model with an endogenous labor supply and variable markups. We find that these results can be reversed. Specifically, in the larger country, the wage rate is lower but the individual income is higher if the love for variety is strong and trade costs are high. In contrast, the wage rate is higher but the individual income may be lower if the love for variety is weak and trade costs are low. [ABSTRACT FROM AUTHOR]

We build an overlapping generations model to analyse the evolution of inequality as an economy develops. Our model economy resembles a 'very capitalist society'. Initially, wealth is exclusively concentrated in a rich dynasty. We ask whether or not this type of capitalist economy contains a fundamental contradiction, as claimed by Piketty in his recent book. We derive a condition under which the economy is driven to a state of perpetual inequality. However, we also show that an economy where capital deepening triggers the development process is very unlikely to be absorbed in that state. [ABSTRACT FROM AUTHOR]

This article analyses the linkages between financial development, labour market institutions and market income inequality for 18 Organisation for Economic Co-operation and Development countries over the 1980 to 2012 period. With the help of a dynamic panel data model with an interacted term, one crucial contribution of this article is to analyse the interacted impact of labour market institutions (i.e. union density and employment protection legislation) on the one hand and financial development on the other hand on the income distribution. Our results indicate that changes in the financial/credit and labour market regulation affect the income distribution. Estimates of the marginal effects show that by increasing labour market regulation one also weakens the impact of the flexibilization in the financial/credit market on the increase in income inequality. [ABSTRACT FROM AUTHOR]

Political institutions are an essential component to explain income variation. Brazilian municipalities are characterized by a great contrast in the colonization process and its impacts on the current income level and distribution, and other development aspects. This study analyzes the spatial heterogeneity of the relationship between institutional quality and the municipalities' economic development. We use a spatial moving window method applied to weighted regressions—Geographically Weighted Regression (GWR). We find evidence that good institutions increase income and other variables related to economic development. In addition, the institutional quality influence on economic development measures is distinct across the Brazilian regions. [ABSTRACT FROM AUTHOR]

We develop a Ricardian model of trade with nonhomothetic preferences to analyze preferential trade agreements ( PTAs) among countries of different stages of economic development. The richer a country is, the more likely will PTAs improve its terms of trade, also when it is a non-member. Rich non-member countries are also less likely to incur welfare losses from PTAs. PTA membership only guarantees welfare gains for countries that are too poor to import the goods rich countries produce. For all other countries, the welfare effects of joining PTAs depend on the world income distribution and on the strength of comparative advantages. [ABSTRACT FROM AUTHOR]