Inequality and growth: industry-level evidence

Erman, Lisardo; Kaat, Daniel Marcel te

doi:10.1007/s10887-019-09169-z

Cited by 35 publications

(19 citation statements)

References 19 publications

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“…We also find that an inequality shock is growth-reducing. These results are the same for the USA and China, and accord with a lot of the earlier literature (see Bandyopadhyay 2018;Banerjee and Duflo 2003;Barro 2000;Berg et al 2018;Brueckner and Lederman 2018;Castelló-Climent 2010;Erman and te Kaat 2019;Forbes 2000;Halter et al 2014;Knowles 2005). Second, estimates of the variance decompositions reveal that the sizes of these effects are very small.…”

Section: Introductionsupporting

confidence: 90%

“…The empirical literature investigating this relationship has identified that the relationship between inequality and growth may be positive or negative, unstable, or even at best non-existent (see Bandyopadhyay 2018; Banerjee and Duflo 2003;Barro 2000;Berg et al 2018;Brueckner and Lederman 2018;Castelló-Climent 2010;Erman and te Kaat 2019;Forbes 2000;Halter et al 2014;Knowles 2005). However, there have been no investigations that explicitly estimate the size of the effect of these entities on each other.…”

Section: Introductionmentioning

confidence: 99%

“…The literature is inconclusive on the exact nature of the relationship. It reports negative, positive, and no significant relationships between inequality and economic growth (see Bandyopadhyay 2018; Banerjee and Duflo 2003;Barro 2000;Berg et al 2018;Brueckner and Lederman 2018;Castelló-Climent 2010;Erman and te Kaat 2019;Forbes 2000;Halter et al 2014;Herzer and Vollmer 2012;Juuti 2020;Knowles 2005;Niño-Zarazúa et al 2017). The literature has typically shown that the relationship is highly sensitive to the sample studied, the estimation methodology, and the time frame in use.…”

mentioning

confidence: 99%

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Size matters: measuring the effects of inequality and growth shocks

Bandyopadhyay¹,

Rui²

2020

WIDER Working Paper

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Understanding the relationship between income inequality and economic growth is of utmost importance to economists and social scientists. In this paper we use a Bayesian structural vector autoregression approach to estimate the relationship between inequality and growth via growth and inequality shocks for two large economies, China and the USA, for the years 1979–2018. We find that a growth shock is inequality-increasing, and an inequality shock is growth-reducing. We also find, however, that the sizes of the effects of these shocks are very small, accounting for under 2 per cent of the variance for both countries. Finally, we also find that the effects of the shocks dissipate within ten years, suggesting that the effects of these shocks are a short-term phenomenon.

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Section: Introductionsupporting

confidence: 90%

Section: Introductionmentioning

confidence: 99%

mentioning

confidence: 99%

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Size matters: measuring the effects of inequality and growth shocks

Bandyopadhyay¹,

Rui²

2020

WIDER Working Paper

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“…Even if the data on the service sector would have been available, services would be less suited for the analysis due to likely lower variation in gender compositions across industries, given that services are documented to be more gender equal in employment than other sectors in both developing and developed economies(Weinberg 2000;Borghans, Weel, and Weinberg 2014; IMF 2018b). 12 This is consistent with, for example,Guiso and others (2004) andErman and Kaat (2019), as well as being the standard practice in previous studies of developing countries using UNIDO data. ©International Monetary Fund.…”

supporting

confidence: 85%

Gender Inequality and Economic Growth

Bertay¹,

Dordevic²,

Sever³

2020

IMF Working Papers

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We study whether higher gender equality facilitates economic growth by enabling better allocation of a valuable resource: female labor. By allocating female labor to its more productive use, we hypothesize that reducing gender inequality should disproportionately benefit industries with typically higher female share in their employment relative to other industries. Specifically, we exploit within-country variation across industries to test whether those that typically employ more women grow relatively faster in countries with ex-ante lower gender inequality. The test allows us to identify the causal effect of gender inequality on industry growth in value-added and labor productivity. Our findings show that gender inequality affects real economic outcomes.

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“…The literature broadly shows that inequality manifests in several dimensions like land deprivation, unemployment, family size, healthcare, malnutrition, illiteracy, child labor, etc., (Wietzke, 2020). When these dimensions cannot be met, people become forced to migrate in search of both a better life and the possibility to send some of their earnings home, thereby reducing inequality and the poverty rate in their country of origin (Erman & te Kaat, 2019;Kuznets, 2019). In so doing, this paper seeks to further develop two issues.…”

Section: Introductionmentioning

confidence: 99%

The Interactive Effects of Remittances on Economic Growth and Inequality in Western Balkan Countries

Bajra

2021

Journal of Business Economics and Management

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Hardly any studies have investigated the impact of migrant remittances on economic growth (EG) and inequality in the Western Balkans as a whole (WB6). Using the method of instrumental variables (VI), the findings show that while remittances influence economic growth, their inflow also promotes a high level of migration and absorbs a large workforce by influencing the labor market and encouraging uncontrolled individual relocation. This paper also reveals that although remittances have eased income inequalities the share of remittances in a country’s economy has declined over the years. After testing for the endogeneity of remittances and controlling for various variables, the results indicate that migrant workers’ remittances do not provide strong support for economic growth and inequality. For the sample average, a 1-percent rise in the share of remittances in the economy (i.e., to GDP) will lead to a 0.10-percent rise in the economic cycle i.e. GDP growth, respectively will lead to a 0.05-percent drop in the share of people living in inequality. The findings also show that the interactive effect of remittances and foreign direct investment is lower on economic growth and inequality than the individual effect of each factor.

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Inequality and growth: industry-level evidence

Cited by 35 publications

References 19 publications

Size matters: measuring the effects of inequality and growth shocks

Size matters: measuring the effects of inequality and growth shocks

Gender Inequality and Economic Growth

The Interactive Effects of Remittances on Economic Growth and Inequality in Western Balkan Countries

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