New evidence on determinants of income inequality

Kwanho Shin, Donggyun Shin

    Research output: Contribution to journalArticlepeer-review

    Abstract

    This paper investigates determinants of income inequality. To refect that income distribution underwent structural changes recently, we analyze various inequality measures: the Gini coefficient, the Estimated Household Income Inequality (EHII) index, and the income share of the top 1 percent. Analysis of country-level panel data suggests that, contrary to the Kuznetz hypothesis, income inequality has worsened recently among developed countries, which is more evident in the income share of the top 1%. The apparent negative effects of trade openness on income inequality are explained by other control variables, and the negative impact of financial openness is observed when the top 1 percent is analyzed. Technological progress is positively associated with income inequality, as measured by the Gini or the top 1 percent, but not the EHII. It is also found that, while income inequality worsens in the degree to which individuals can participate in the political process of their country, it is reduced by expanded government expenditures.

    Original languageEnglish
    Pages (from-to)125-162
    Number of pages38
    JournalJournal of Economic Theory and Econometrics
    Volume24
    Issue number2
    Publication statusPublished - 2013 Jun

    Keywords

    • Financial openness
    • Income inequality
    • Technological progress
    • Trade openness

    ASJC Scopus subject areas

    • Economics and Econometrics

    Fingerprint

    Dive into the research topics of 'New evidence on determinants of income inequality'. Together they form a unique fingerprint.

    Cite this