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11. The Burden of COVID-19: Urgent Need for Social Safety Nets

Author:
Jose M. L. Montesclaros and Mely Caballero-Anthony
Publication Date:
03-2020
Content Type:
Commentary and Analysis
Institution:
Centre for Non-Traditional Security Studies, S. Rajaratnam School of International Studies
Abstract:
The lockdown policies to fight COVID-19 have caused massive economic disruptions, seriously affecting poorer income groups that live on a hand-to-mouth existence. Policies to keep countries safe from pandemics must come with clear and timely social safety net programmes to protect these vulnerable groups.
Topic:
Income Inequality, Social Services, Pandemic, and COVID-19
Political Geography:
Global Focus

12. The Effects of Minimum Wages on Wage Inequality and Gender Pay Gap in APEC Economies

Author:
Seongman Moon
Publication Date:
11-2019
Content Type:
Special Report
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
This paper investigates the effects of an increase in minimum wages on wage inequality and gender pay gap in APEC economies using unbalanced economy-level panel data from 1990 to 2017. We estimate both linear and quadratic models of the effective minimum wage, while controlling for mac-roeconomic variables that could affect wage inequality as well as gender pay gap. The increase in the minimum wage has the effect of alleviating the wage inequality at the lower-tail of the wage distribution. The effect is much greater for women than for men, which contributes to reducing gender pay gap. On the other hand, the rise in the minimum wage does not affect the wage ine-quality at the upper-tail of the wage distribution for both women and men.
Topic:
Gender Issues, Income Inequality, Economy, and Minimum Wage
Political Geography:
Global Focus

13. Estimates of the Natural Rate of Interest and the Stance of Monetary Policies: A Critical Assessment

Author:
Enrico Sergio Levrero
Publication Date:
01-2019
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
After briefly mentioning the determinants of the natural rate of interest in the New Keynesian models, the paper discusses the different notions of it that we find in these models and the problems encountered when the natural rate is estimated. It states that these problems are not only related to the difficulties in distinguishing the kind and persistency of economic shocks, but pertain to theory, namely to model specification and the alleged independence of the average or normal interest rate from monetary policy. Following Keynes’s suggestion regarding the monetary nature of interest rates, some final remarks will thus be advanced on their effects on prices and income distribution as well as on the objectives and stance of monetary policies.
Topic:
Economics, Monetary Policy, Income Inequality, Macroeconomics, and Keynes
Political Geography:
United States and Global Focus

14. Achieving Political Inclusion

Author:
GMF
Publication Date:
10-2019
Content Type:
Policy Brief
Institution:
German Marshall Fund of the United States (GMFUS)
Abstract:
Democracies are facing serious stresses at this time. We believe that by making political practice in our democracies more inclusive, we will also make our democracies more robust and enduring, and better showcase this political system which is well suited to organize stable, peaceful and lawful societies for our world on the move. In this reader, we introduce themes for action and share perspectives of diverse political actors and activists in the German Marshall Fund of the United States (GMF) network. We look toward democratic practice where the full involvement of citizens increases the total amount of power available in our societies, rather than zero sum approaches to democratic practice where power is considered to be limited and the temptation is therefore to monopolize and to withhold it.
Topic:
Gender Issues, International Political Economy, and Income Inequality
Political Geography:
Global Focus

15. The Decline of Employment Protection and the Rise of Precarious Work

Author:
Anne Marie Brady
Publication Date:
09-2019
Content Type:
Special Report
Institution:
German Marshall Fund of the United States (GMFUS)
Abstract:
By 1989, the employment landscape in the United States and Europe had changed significantly from the immediate post-Second World War decades. Between 1960 and 1973, the unemployment rate as a percentage of the total labor force averaged two percent or below in Western Europe’s big economies and 4.8 percent in the United States, but between 1990 and 1995, the average unemployment rate in the United States was 6.4 percent and between 7 and 10.7 percent in Germany, France, and the United Kindgom.1
Topic:
International Political Economy, Employment, and Income Inequality
Political Geography:
Global Focus

16. Does Economic Globalisation Affect Income Inequality? A Meta-analysis

Author:
Philipp Heimberger
Publication Date:
10-2019
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
A large volume of econometric literature has studied the impact of economic globalisation on income inequality around the world. However, reported econometric estimates vary substantially which makes it difficult to draw valid conclusions. This paper presents a quantitative summary and analysis of existing estimates regarding the globalisation-inequality relationship. We used a new data set consisting of 1254 observations from 123 peer-reviewed papers. By applying meta-analysis and meta-regression methods, we obtained several main findings. First, globalisation has a (small-to-moderate) positive impact on income inequality considering the total population of estimates. The average effect is robustly different from zero suggesting that globalisation increases income inequality. Second, while the effect of trade globalisation is small, financial globalisation shows a more sizable and significantly stronger inequality-increasing impact. Third, the cumulative evidence rejects theoretical accounts according to which economic globalisation reduces within-country income inequality in developing countries as the meta-analysis establishes an average inequality-increasing impact in both advanced and developing countries. Fourth, education and technology moderate the impact of globalisation on income inequality. Fifth, we tested for various other factors that could cause heterogeneity in the reported estimates including differences in the econometric specifications, the income inequality measures and data set used and publication characteristics.
Topic:
Globalization, Finance, Income Inequality, Macroeconomics, Trade, and Meta-analysis
Political Geography:
Global Focus

17. Tourism as a Mechanism in Reducing Income Inequality in Developing Economies

Author:
D. Tan and Risa Morimoto
Publication Date:
12-2019
Content Type:
Working Paper
Institution:
School of Oriental and African Studies - University of London
Abstract:
Although numerous studies have investigated the contribution of tourism to economic growth and development, much less attention has been paid to assessing whether tourism-induced growth and development contribute to the poverty alleviation and income inequality (Kinyondo & Pelizzo, 2015). This study emamines the statistical relationship between tourism activities and a suite of income inequality measures. Using a dynamic fixed country-level effects panel model and bootstrapped standard errors, we find strong evidence showing both tourism dollars and inbound tourism numbers have an adverse effect ion income equality. These findings are supported by the results of the fixed-effects panel and dynamic pooled OLS regressions. The results of this study suggest that more effort should be exerted to develop pro-poor tourism initiatives in order to mitigate the inequitable distribution of the benefits of tourism as well as to reduce possible environmental degradation caused by rural poverty.
Topic:
Development, Tourism, Inequality, Income Inequality, Economic Theory, and Models
Political Geography:
Global Focus

18. Financial Market Integration and Income Inequality

Author:
Jae Wook Jung and Kyunghun Kim
Publication Date:
07-2018
Content Type:
Working Paper
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
Benefits of financial market integration include cheaper and alternative op-tions of saving and borrowing for households and entrepreneurs. In the global financial market, asset choices for households widen so that individu-als can manage their idiosyncratic income risk more effectively. On the other hand, financial market integration makes investors who hold foreign assets more vulnerable to global financial shocks. In the recent financial crisis, finan-cial market distress which initially arose in the U.S. had an enormous impact on the peripheral countries. This example shows that the strong shock prop-agation occurs via integrated financial markets. The existing literature shows that financial market integration has a sizable impact not only on business cycles in the short run, but also on economic growth in the long run. However, there has been little attention to income distribution, specifically in related to the financial market integration. In this paper, we fill the void in the literature by focusing on the following two styl-ized facts: income inequality has been exacerbated in most countries over the past two decades, and the financial market has been integrated across coun-tries during the same period. In particular, we answer three research questions to investigate the relationship between the two facts. First, how does financial market integration affect income inequality? Second, how do financial market integration and financial market development interact to change income ine-quality? Third, what components do theoretical model need to explain the interaction effect of financial market development and integration on income inequality? We test hypotheses that the effect of financial market openness on inequality is conditional on the level of domestic financial market development when the financial market opens. An empirical study with panel data comprised of 174 countries for the period 1995-2017 finds that the overall effect of finan-cial integration on income inequality is nonlinear. Financial market integration creates the intensive and extensive margins of credit supply which may de-pend on the development level of financial market disproportionally. This paper uncovers a novel empirical evidence that financial market integration and financial market development interact to change income inequality. When other things are controlled, the effect of financial market integration on in-come inequality depends on financial market development. In a country with underdeveloped financial market, income inequality gets worse as financial market opens. On the other hand, when financial market is highly developed, the effect of financial market openness on income inequality is mostly insig-nificant in a statistical sense. The results are still valid with different measures of financial market development, integration, and income inequality. We check that the results are robust as an endogeneity issue among financial market development and integration is controlled. We also suggest some important structures for the conventional economic model to account for our empirical finding as theoretical implications. Based on these implications, extensions of the conventional small open economy model with financial constraints having suggested components such as het-erogeneous holdings of foreign assets across income and asset levels and entrepreneurial shocks will be necessary to understand an interaction of fi-nancial market openness and domestic market development on the distribu-tion of income in a country. Our finding also echoes that studying an eco-nomic mechanism in which economic growth, financial market outcomes, and inequality are endogenously determined.
Topic:
Development, Income Inequality, Financial Markets, Economic Growth, and Integration
Political Geography:
Global Focus

19. Inequality in the 21st century: A critical analysis of Piketty’s work

Author:
Nadia Garbellini
Publication Date:
01-2018
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
Thomas Piketty’s (2014) Capital in the XXI Century aims to analyze distributions of income and wealth and their determinants, in a set of developed countries from the nineteenth century to the present. The objective is a bold one, made even more so by the fact that Piketty pursues it not only from a theoretical, but also, from an empirical point of view. The task is particularly impressive not only because of the enormous effort required in collecting and organising data, but also because the work entails attaching a deterministic interpretation to facts and figures from radically different countries over a time span that covers almost two centuries, thereby forcing comparison between numbers coming from clearly incommensurable contexts. These difficulties are not lost to Piketty, who states that “[w]ithout precisely defined sources, methods, and concepts, it is possible to see everything and its opposite.” (Piketty, 2014, pp.2-3) This study argues that the empirical ‘methods and concepts’ adopted by Piketty are not always consistent with those coming from his reference theoretical framework, nor from National Accounts (United Nations, 2009).
Topic:
Economics, Inequality, Income Inequality, Economic Growth, and Capital
Political Geography:
Global Focus

20. Universal Basic Income as a Tool of Empowerment for Minorities

Author:
Sonja Wolf and Craig Willis
Publication Date:
12-2018
Content Type:
Research Paper
Institution:
European Centre for Minority Issues (ECMI)
Abstract:
Minority empowerment is a relatively new approach on research and policy-making in the field of minority studies. At its core lies the ideal to remove the marginalisation of minorities by providing room for them to take agency on their own behalf. One policy that has been identified as having the potential to rapidly affect marginalised communities is the implementation of a Universal Basic Income; a monthly amount paid equally to all residents of an area without any means-testing or conditions. This working paper explores how these two fields of research can connect and identifies the key areas of everyday life that could be affected. This includes focus on employment, education, relationships and family life, community work, and government intrusion and social stigma; core elements for any individual and society, including minority communities. The analysis section finds that UBI has the potential to alter all of these aspects, but only if it is used to increase the existing standard of welfare and government services and not as an opportunity to reduce government spending by cutting the vital existing programmes.
Topic:
Labor Issues, Minorities, Income Inequality, Universal Basic Income, Welfare, and Social Services
Political Geography:
Global Focus