Pub Date : 2019-09-16DOI: 10.1108/S1049-2585201927
Koen Decancq
There is a great deal of coverage on inequality, and the key determinants of recent trends are increasingly well-documented. However, much less is known about the driving forces behind international differences in inequality.
{"title":"What Drives Inequality","authors":"Koen Decancq","doi":"10.1108/S1049-2585201927","DOIUrl":"https://doi.org/10.1108/S1049-2585201927","url":null,"abstract":"There is a great deal of coverage on inequality, and the key determinants of recent trends are increasingly well-documented. However, much less is known about the driving forces behind international differences in inequality.","PeriodicalId":90318,"journal":{"name":"Research on economic inequality","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2019-09-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1108/S1049-2585201927","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"62307101","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-09-16DOI: 10.1108/s1049-258520190000027006
G. Verbist, M. Förster
This chapter discusses the major steps and issues related to the inclusion of public services in inequality research. Empirically, it investigates how the income distribution in countries changes when the value of publicly provided services to households is included. The authors consider five major categories of public services: education, health care, social housing, childcare and elderly care. On average across OECD countries, spending on these ‘in-kind’ benefits accounts for about 13% of GDP, slightly more than the spending on cash transfers – but with considerable cross-country variation. Broadening the income concept to account for in-kind benefits considerably increases households’ economic resources. But public services also contribute to reducing income inequality, by between one-fifth and one-third depending on the inequality measure. This chapter suggests that publicly provided services fulfil an important direct redistributive role in OECD countries.
{"title":"Accounting for Public Services in Distributive Analysis1","authors":"G. Verbist, M. Förster","doi":"10.1108/s1049-258520190000027006","DOIUrl":"https://doi.org/10.1108/s1049-258520190000027006","url":null,"abstract":"This chapter discusses the major steps and issues related to the inclusion of public services in inequality research. Empirically, it investigates how the income distribution in countries changes when the value of publicly provided services to households is included. The authors consider five major categories of public services: education, health care, social housing, childcare and elderly care. On average across OECD countries, spending on these ‘in-kind’ benefits accounts for about 13% of GDP, slightly more than the spending on cash transfers – but with considerable cross-country variation. Broadening the income concept to account for in-kind benefits considerably increases households’ economic resources. But public services also contribute to reducing income inequality, by between one-fifth and one-third depending on the inequality measure. This chapter suggests that publicly provided services fulfil an important direct redistributive role in OECD countries.","PeriodicalId":90318,"journal":{"name":"Research on economic inequality","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2019-09-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1108/s1049-258520190000027006","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47374710","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-09-16DOI: 10.1108/s1049-258520190000027007
Louis Chauvel, Anne Hartung, Eyal Bar-Haim, P. Kerm
The study of the upper tail of the income and wealth distributions is important to the understanding of economic inequality. By means of the ‘isograph’, a new tool to describe income or wealth distributions, the authors compare wealth and income and wealth-to-income ratios in 16 European countries and the United States using data for years 2013/2014 from the Eurozone Household Finance and Consumption Survey and the US Survey on Consumer Finance. Focussing on the top half of the distribution, the authors find that for households in the top income quintile, wealth-to-income ratios generally increase rapidly with income; the association between high wealth and high incomes is highest among the highest percentiles. There is generally a positive relationship between median wealth in the country and the wealth of the top 1%. However, the United States is an outlier where the median wealth is relatively low but the wealth of the top 1% is extremely high.
{"title":"Income and Wealth Above the Median: New Measurements and Results for Europe and the United States","authors":"Louis Chauvel, Anne Hartung, Eyal Bar-Haim, P. Kerm","doi":"10.1108/s1049-258520190000027007","DOIUrl":"https://doi.org/10.1108/s1049-258520190000027007","url":null,"abstract":"The study of the upper tail of the income and wealth distributions is important to the understanding of economic inequality. By means of the ‘isograph’, a new tool to describe income or wealth distributions, the authors compare wealth and income and wealth-to-income ratios in 16 European countries and the United States using data for years 2013/2014 from the Eurozone Household Finance and Consumption Survey and the US Survey on Consumer Finance. Focussing on the top half of the distribution, the authors find that for households in the top income quintile, wealth-to-income ratios generally increase rapidly with income; the association between high wealth and high incomes is highest among the highest percentiles. There is generally a positive relationship between median wealth in the country and the wealth of the top 1%. However, the United States is an outlier where the median wealth is relatively low but the wealth of the top 1% is extremely high.","PeriodicalId":90318,"journal":{"name":"Research on economic inequality","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2019-09-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1108/s1049-258520190000027007","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47337690","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-09-16DOI: 10.1108/s1049-258520190000027009
Antoine Genest-Grégoire, J. Guay, L. Godbout
Politicians of all stripes appeal to the support of the middle class and aim their policy proposals at this group. Reference-group theory explains why citizens could believe themselves to be middle class, even if their income level or social status places them above or below. It postulates that, since the reference groups of most people are relatively homogeneous, anyone could feel ‘average’ compared to the reference group. The authors aim to test this theory by comparing perceptions about the middle class with a categorisation using objective income statistics. A survey of the adult population of the Canadian province of Quebec showed a significant proportion of citizens believing to be part of the middle class, even though their equivalised income levels placed them outside of a generally recognised income range for this group. Most notably, this subjective misplacement on the income distribution was heavily concentrated among individuals whose incomes were too high to be a part of the middle class. Our results also show that support for higher taxes on the rich might be overstated, as some respondents simply do not realise that they are a part of this group.
{"title":"Never Too Rich to Be middle-class: An Assessment of the Reference-group Theory and Implications for Redistributive Taxation","authors":"Antoine Genest-Grégoire, J. Guay, L. Godbout","doi":"10.1108/s1049-258520190000027009","DOIUrl":"https://doi.org/10.1108/s1049-258520190000027009","url":null,"abstract":"Politicians of all stripes appeal to the support of the middle class and aim their policy proposals at this group. Reference-group theory explains why citizens could believe themselves to be middle class, even if their income level or social status places them above or below. It postulates that, since the reference groups of most people are relatively homogeneous, anyone could feel ‘average’ compared to the reference group. The authors aim to test this theory by comparing perceptions about the middle class with a categorisation using objective income statistics. A survey of the adult population of the Canadian province of Quebec showed a significant proportion of citizens believing to be part of the middle class, even though their equivalised income levels placed them outside of a generally recognised income range for this group. Most notably, this subjective misplacement on the income distribution was heavily concentrated among individuals whose incomes were too high to be a part of the middle class. Our results also show that support for higher taxes on the rich might be overstated, as some respondents simply do not realise that they are a part of this group.","PeriodicalId":90318,"journal":{"name":"Research on economic inequality","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2019-09-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1108/s1049-258520190000027009","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43093975","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-09-16DOI: 10.1108/s1049-258520190000027008
M. Ledić, Ivica Rubil
The authors study the difference between multidimensional well-being inequality and income inequality and propose a method to decompose the difference between the Gini coefficients of income and equivalent income (EI), a multidimensional well-being measure that respects individual preferences towards what constitutes a good life. The authors propose a method to decompose the inequality difference into two parts: the vertical and reranking effects. The vertical effect arises from the correlation between income and non-income dimensions, and between income and preferences. The reranking effect arises from the fact that some persons occupy a different position in the EI distribution compared to the income distribution. The authors also propose a detailed decomposition method based on the Shapley value to decompose each of the two effects by non-income dimensions. The authors apply the decompositions using data for 27 countries, considering five non-income dimensions: unemployment, health, housing, crime and environment. The results show that inequality is much higher for EI that the reranking effect accounts for a large part of the inequality difference, and that health is the non-income dimension contributing most to both effects.
{"title":"Decomposing the Difference Between Well-Being Inequality and Income Inequality: Method and Application","authors":"M. Ledić, Ivica Rubil","doi":"10.1108/s1049-258520190000027008","DOIUrl":"https://doi.org/10.1108/s1049-258520190000027008","url":null,"abstract":"The authors study the difference between multidimensional well-being inequality and income inequality and propose a method to decompose the difference between the Gini coefficients of income and equivalent income (EI), a multidimensional well-being measure that respects individual preferences towards what constitutes a good life. The authors propose a method to decompose the inequality difference into two parts: the vertical and reranking effects. The vertical effect arises from the correlation between income and non-income dimensions, and between income and preferences. The reranking effect arises from the fact that some persons occupy a different position in the EI distribution compared to the income distribution. The authors also propose a detailed decomposition method based on the Shapley value to decompose each of the two effects by non-income dimensions. The authors apply the decompositions using data for 27 countries, considering five non-income dimensions: unemployment, health, housing, crime and environment. The results show that inequality is much higher for EI that the reranking effect accounts for a large part of the inequality difference, and that health is the non-income dimension contributing most to both effects.","PeriodicalId":90318,"journal":{"name":"Research on economic inequality","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2019-09-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1108/s1049-258520190000027008","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44844845","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-09-16DOI: 10.1108/s1049-258520190000027003
M. Bussolo, Carla Krolage, Mattia Makovec, A. Peichl, M. Stöckli, Iván Torre, Christian Wittneben
European countries have the world’s most redistributive tax and transfer systems. While they have been well equipped to deal with vertical inequality – fostering redistribution from the rich to the poor – less is known about their performance in dealing with horizontal inequality, that is, in redistributing across socioeconomic groups. In a context where individuals may not only care about vertical redistribution, but also about the economic situation of the specific groups they belong to, the horizontal dimension of redistribution becomes politically salient and can be a source of social tensions. The authors analyse the performance of the 28 EU countries for redistribution across (i) age groups; (ii) occupational groups; and (iii) household types over the period 2007–2014 using counterfactual simulation techniques. We find a significant degree of heterogeneity across countries: changes in the tax and transfer system have particularly hit the young and the losers of occupational change in Eastern European countries, while households with greater economic security have benefited from these changes. The findings of this study suggest that horizontal inequality is a dimension which policy-makers should take into account when reforming tax and transfer systems.
{"title":"Vertical and Horizontal Redistribution: Evidence from Europe","authors":"M. Bussolo, Carla Krolage, Mattia Makovec, A. Peichl, M. Stöckli, Iván Torre, Christian Wittneben","doi":"10.1108/s1049-258520190000027003","DOIUrl":"https://doi.org/10.1108/s1049-258520190000027003","url":null,"abstract":"European countries have the world’s most redistributive tax and transfer systems. While they have been well equipped to deal with vertical inequality – fostering redistribution from the rich to the poor – less is known about their performance in dealing with horizontal inequality, that is, in redistributing across socioeconomic groups. In a context where individuals may not only care about vertical redistribution, but also about the economic situation of the specific groups they belong to, the horizontal dimension of redistribution becomes politically salient and can be a source of social tensions. The authors analyse the performance of the 28 EU countries for redistribution across (i) age groups; (ii) occupational groups; and (iii) household types over the period 2007–2014 using counterfactual simulation techniques. We find a significant degree of heterogeneity across countries: changes in the tax and transfer system have particularly hit the young and the losers of occupational change in Eastern European countries, while households with greater economic security have benefited from these changes. The findings of this study suggest that horizontal inequality is a dimension which policy-makers should take into account when reforming tax and transfer systems.","PeriodicalId":90318,"journal":{"name":"Research on economic inequality","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2019-09-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1108/s1049-258520190000027003","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43856266","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-09-16DOI: 10.1108/s1049-258520190000027005
Arip Muttaqien, C. O’Donoghue, D. Sologon
Although they are neighbouring Asian countries with many similarities, India and Indonesia have different levels of household expenditure inequality. During the end of 2000s, the Gini coefficient of Indonesia was 9.1 percentage points larger than the Gini coefficient of India. To understand the determinants of this difference, this study decomposes it into the contribution of price effects, demographic effects and labour market structure effects. Differences in expenditure structures (price effects) and demographic characteristics are found to be the greatest contributors to the inequality gap across the two countries. The difference in the education distribution of household heads also has a positive and significant impact on the inequality gap. Differences in the labour market structure, on the other hand, turn out to be less important.
{"title":"Understanding Differences in Household Expenditure Inequality Between India and Indonesia","authors":"Arip Muttaqien, C. O’Donoghue, D. Sologon","doi":"10.1108/s1049-258520190000027005","DOIUrl":"https://doi.org/10.1108/s1049-258520190000027005","url":null,"abstract":"Although they are neighbouring Asian countries with many similarities, India and Indonesia have different levels of household expenditure inequality. During the end of 2000s, the Gini coefficient of Indonesia was 9.1 percentage points larger than the Gini coefficient of India. To understand the determinants of this difference, this study decomposes it into the contribution of price effects, demographic effects and labour market structure effects. Differences in expenditure structures (price effects) and demographic characteristics are found to be the greatest contributors to the inequality gap across the two countries. The difference in the education distribution of household heads also has a positive and significant impact on the inequality gap. Differences in the labour market structure, on the other hand, turn out to be less important.","PeriodicalId":90318,"journal":{"name":"Research on economic inequality","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2019-09-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1108/s1049-258520190000027005","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42732154","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-09-16DOI: 10.1108/s1049-258520190000027002
Tsvetana Spasova
This work studies trends in income distributions and inequality in the Euro- pean Union using data from the European Union Statistics on Income and Living Conditions. We model the income distribution for each country under a Dagum distribution assumption and using maximum likelihood techniques. We use pa- rameter estimates to form distributions for regions defined as finite mixtures of the country distributions. Specifically, we study the groups of new" and old" countries depending on the year they joined the European Union. We provide formulae and estimates for the regional Gini coefficients and Lorenz curves and their decomposition for all the survey years from 2007 through 2011. Our esti- mates show that the new" European Union countries have become richer and less unequal over the observed years, while the old" ones have undergone a slight increase in inequality which is however not significant at conventional levels.
{"title":"Regional Income Distribution in the European Union: A Parametric Approach","authors":"Tsvetana Spasova","doi":"10.1108/s1049-258520190000027002","DOIUrl":"https://doi.org/10.1108/s1049-258520190000027002","url":null,"abstract":"This work studies trends in income distributions and inequality in the Euro- pean Union using data from the European Union Statistics on Income and Living Conditions. We model the income distribution for each country under a Dagum distribution assumption and using maximum likelihood techniques. We use pa- rameter estimates to form distributions for regions defined as finite mixtures of the country distributions. Specifically, we study the groups of new\" and old\" countries depending on the year they joined the European Union. We provide formulae and estimates for the regional Gini coefficients and Lorenz curves and their decomposition for all the survey years from 2007 through 2011. Our esti- mates show that the new\" European Union countries have become richer and less unequal over the observed years, while the old\" ones have undergone a slight increase in inequality which is however not significant at conventional levels.","PeriodicalId":90318,"journal":{"name":"Research on economic inequality","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2019-09-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1108/s1049-258520190000027002","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43588221","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-09-16DOI: 10.1108/s1049-258520190000027010
Begoña Cabeza, Koen Decancq
The authors explore the effect of the recent unemployment shock in Spain on people’s beliefs about the role of effort as a determinant of economic position. They use a series of Spanish public opinion surveys between 2010 and 2018, matched with regional-level unemployment data and find that people attribute a larger role to luck in provinces where the unemployment rate increased more during the economic recession. This finding persists after controlling for a series of demographic, socio-economic and ideological individual-level variables. In addition, the authors find that lower educated individuals, and those who position themselves as more left-wing have adjusted their beliefs more, while individuals who identify as conservative have adjusted their beliefs less.
{"title":"Beliefs About the Role of Effort and Luck During the Great Recession in Spain","authors":"Begoña Cabeza, Koen Decancq","doi":"10.1108/s1049-258520190000027010","DOIUrl":"https://doi.org/10.1108/s1049-258520190000027010","url":null,"abstract":"The authors explore the effect of the recent unemployment shock in Spain on people’s beliefs about the role of effort as a determinant of economic position. They use a series of Spanish public opinion surveys between 2010 and 2018, matched with regional-level unemployment data and find that people attribute a larger role to luck in provinces where the unemployment rate increased more during the economic recession. This finding persists after controlling for a series of demographic, socio-economic and ideological individual-level variables. In addition, the authors find that lower educated individuals, and those who position themselves as more left-wing have adjusted their beliefs more, while individuals who identify as conservative have adjusted their beliefs less.","PeriodicalId":90318,"journal":{"name":"Research on economic inequality","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2019-09-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1108/s1049-258520190000027010","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48888161","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-11-29DOI: 10.1108/S1049-258520180000026003
Claudio Zoli
Abstract We investigate the relationship between the notion of progressive taxation and inequality reduction under a general version of the concept of inequality equivalence. We consider a two-parameter formalization of the concept of inequality equivalence that both includes, as special cases, the intermediate inequality equivalence and the path-independent/unit-consistent inequality equivalence. Both criteria could range from relative to absolute inequality views as the parameters in the formulation change. For the path-independent/unit-consistent inequality equivalence the condition of nondecreasing average tax rate is necessary and sufficient to guarantee the inequality-reducing effect of taxation for all the inequality views in between the relative and the absolute.
{"title":"Chapter 2 A Note on Progressive Taxation and Inequality Equivalence","authors":"Claudio Zoli","doi":"10.1108/S1049-258520180000026003","DOIUrl":"https://doi.org/10.1108/S1049-258520180000026003","url":null,"abstract":"Abstract \u0000We investigate the relationship between the notion of progressive taxation and inequality reduction under a general version of the concept of inequality equivalence. We consider a two-parameter formalization of the concept of inequality equivalence that both includes, as special cases, the intermediate inequality equivalence and the path-independent/unit-consistent inequality equivalence. Both criteria could range from relative to absolute inequality views as the parameters in the formulation change. For the path-independent/unit-consistent inequality equivalence the condition of nondecreasing average tax rate is necessary and sufficient to guarantee the inequality-reducing effect of taxation for all the inequality views in between the relative and the absolute.","PeriodicalId":90318,"journal":{"name":"Research on economic inequality","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-11-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1108/S1049-258520180000026003","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41509848","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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