Economic Growth, Inequality, Democratization, and the Environment

We augment the Stokey (1998) model by allowing agents to differ with respect to environmental quality and income in order to analyze the impact of income and environmental inequality, and of democratization on aggregate pollution. We find that the impact of a more equal income distribution depends on the degree of democracy. In a complete democracy a more equal income distribution generates, ceteris paribus, less pollution, which is consistent with indirect empirical evidence, whereas the opposite is the case if democratic rights are highly restricted. Further-more, a democratization is argued to typically lower both the income and the environmental quality of the median voter. In this case, if, in utility terms, the fall in environmental quality is worse than the fall in consumption the median voter decides to tighten environmental legislation so that aggregate pollution decreases.Economic growth and the environment; inequality; politics

Income inequality and growth: A regime-switching approach.

This paper explores the methodology of regime-switching in the analysis of the income inequality-economic growth relationship. The underlying idea is that when some income determinant passes a certain threshold introduces a new relationship between inequality and income and/or income determinants. There are three implications of the estimated models. First, inequality decreases with economic growth when government consumption as share of GDP is ‘low’. Second, in a ‘low’ inflation environment government consumption increases inequality. Third, in countries with ‘strict’ rule of law openness to international trade and government consumption are associated with lower inequality, while financial development implies higher inequality.Kuznets curve, regime-switching, growth determinants, thresholds

Inequality and economic growth in Bangladesh- a diversified evidence on Kuznets pattern 'U' hypothesis

The study of inequality and economic growth to the developing countries are now a days a comprehensive issue since growth stimulate the standard of living to the poor people and accordingly reduce income inequality.The improvement of inequality and growth may reduce the social movement to the government and may keep the economic and social integrity amongst the different ethnic groups by efficient resource allocation and income redistribution in Bangladesh. The objective of this research is to assess the long term relationship between inequality and growth in Bangladesh with a methodology of Kuznets pattern inverted U hypothesis first introduced by Simon Kuznets since 1955. The popular concept of Kuznets hypothesis suggests that as economic growth occurs,income inequality first increase and then decline after a certain turning point. The study of Kuznets hypothesis is popular to the international economic environment rather than domestic, especially to the developing countries where the per capita GDP is below the level of world average. This study found the evidence that the presumption of Kuznets hypothesis has satisfy in the economy of Bangladesh in national level. In low income countries, structural adjustment is necessary to satisfy the Kuznets hypothesis.Kuznets Hypothesis, Inequality, Growth

Investing in Knowledge: Insights on the Funding Landscape for Research on Inequality Among Young People in the United States

This report maps the current funding environment for research on understanding and addressing social and economic inequality among young people in the U.S. To situate the existing funding landscape, I begin with a broad articulation of what is meant by inequality. Next, I characterize the structure of the funding landscape before turning to a description of three primary approaches used by funders to support research on inequality among young people in the U.S. These characterizations emerged from a set of informant interviews with social science researchers and foundation and government funders and a document scan of funder's websites. The report concludes with a brief discussion of potential strategies funding organizations could use to improve efforts to understand and address inequality among young people in the U.S

Polarization, politics, and property rights : links between inequality and growth

Most efforts to trace the effects of income inequality on growth have focused on redistribution. However, empirical investigation has not substantiated either the positive association of income inequality with redistribution or the negative association of redistribution with economic growth. The authors analyze the effects of inequality in the broader context of social polarization. They argue that social polarization, whether rooted in income inequality or in ethnic tension, makes large changes in current policies (including those guaranteeing the security of contract and property rights) more likely under a wide range of institutional arrangements. The resulting uncertainties in the policy and contractual environment hinder growth. They find strong empirical support for both parts of this argument. The policy implications of their argument are quite distinct from those of arguments that inequality reduces growth by increasing pressures for redistribution. If redistributive policies per se were to blame for the low growth resulting from inequality, governments that seek to mitigate income inequality must inevitably confront a tradeoff between equity and growth. If, on the other hand, the insecurity of property rights slows growth in unequal or otherwise polarized societies, governments that commit over the long run to particular redistributive policies incur less risk of slowing economic growth. Fiscal redistribution that reduces inequality may actually increase growth by reducing the risks of political uncertainty.Poverty Impact Evaluation,Economic Theory&Research,Human Rights,Labor Policies,Environmental Economics&Policies,Environmental Economics&Policies,Inequality,Governance Indicators,Poverty Impact Evaluation,Economic Theory&Research

Trade and Geography in the Economic Origins of Islam: Theory and Evidence

This research examines the economic origins of Islam and uncovers two empirical regularities. First, Muslim countries, virtual countries and ethnic groups, exhibit highly unequal regional agricultural endowments. Second, Muslim adherence is systematically larger along the pre-Islamic trade routes in the Old World. The theory argues that this particular type of geography (i) determined the economic aspects of the religious doctrine upon which Islam was formed, and (ii) shaped its subsequent economic performance. It suggests that the unequal distribution of land endowments conferred differential gains from trade across regions, fostering predatory behavior from the poorly endowed ones. In such an environment it was mutually beneficial to institute a system of income redistribution. However, a higher propensity to save by the rich would exacerbate wealth inequality rendering redistribution unsustainable, leading to the demise of the Islamic unity. Consequently, income inequality had to remain within limits for Islam to persist. This was instituted via restrictions on physical capital accumulation. Such rules rendered the investments on public goods, through religious endowments, increasingly attractive. As a result, capital accumulation remained low and wealth inequality bounded. Geography and trade shaped the set of economically relevant religious principles of Islam affecting its economic trajectory in the preindustrial world.Religion; Physical Capital; Human Capital; Land Inequality; Wealth Inequality

Trade and geography in the economic origins of Islam: theory and evidence

This research examines the economic origins of Islam and uncovers two empirical regularities. First, Muslim countries, virtual countries and ethnic groups, exhibit highly unequal regional agricultural endowments. Second, Muslim adherence is systematically larger along the pre-Islamic trade routes in the Old World. The theory argues that this particular type of geography (i) determined the economic aspects of the religious doctrine upon which Islam was formed, and (ii) shaped its subsequent economic performance. It suggests that the unequal distribution of land endowments conferred di¤erential gains from trade across regions, fostering predatory behavior from the poorly endowed ones. In such an environment it was mutually beneficial to institute a system of income redistribution. However, a higher propensity to save by the rich would exacerbate wealth inequality rendering redistribution unsustainable, leading to the demise of the Islamic unity. Consequently, income inequality had to remain within limits for Islam to persist. This was instituted via restrictions on physical capital accumulation. Such rules rendered the investments on public goods, through religious endowments, increasingly attractive. As a result, capital accumulation remained low and wealth inequality bounded. Geography and trade shaped the set of economically relevant religious principles of Islam affecting its economic trajectory in the preindustrial world.Religion; Islam; Geography; Physical Capital; Human Capital; Land Inequality; Wealth Inequality; Trade

Inequality Aversion and Performance in and on the Field

The experimental literature and studies using survey data have established that people care a great deal about their relative economic position and not solely, as standard economic theory assumes, about their absolute economic position. Individuals are concerned about social comparisons. However, behavioral evidence in the field is rare. This paper provides an empirical analysis, testing the model of inequality aversion using two unique panel data sets for basketball and soccer players. We find support that the concept of inequality aversion helps to understand how the relative income situation affects performance in a real competitive environment with real tasks and real incentives.Inequality aversion, relative income, positional concerns, envy, social comparison, performance, interdependent preferences

Development under conditions of inequality and distrust: Social cohesion in Latin America

"This paper analyzes the role of social cohesion in economic and institutional development and, broadly, the creation of welfare in Latin America. The paper defines the concept of social cohesion with reference to the notions of social capital and inequality. Using data and literature on Latin America, the paper argues that low interpersonal trust and entrenched inequality interfere with cohesion. The paper develops and introduces an exploratory index of cohesion structured around the definition proposed. Relying on correlations, and with appropriate caveats, the paper uses this index to explore tentative linkages between levels of cohesion and development outcomes. The paper presents evidence of positive linkages among social cohesion and economic growth, investment and innovation capacity, governmental effectiveness, the quality of public policies, and the predictability of the policy environment. Finally, the paper discusses the significance of these findings and some of the policy implications." from Author's AbstractSocial cohesion, Social capital, Trust, Inequality, Exclusion, Opportunities, Governance, Institutional development, economic growth, Development strategies,

Intergenerational mobility and interraical inequality:the return to family values

This paper investigates two questions. First, what is the relative importance of the components of childhood family environment—parental values versus parental class status—for young adult economic outcomes? Second, are interracial differences in labor market outcomes fully explained by differences in family environment? We find that both family values and family class status affect intergenerational mobility and inter-racial inequality. Consideration of racial differences in parental values and class status alters but does not eliminate the impact of race on the labor market outcomes of young adults.intergenerational mobility; racial inequality; racial discrimination; values; behavior; social capital; socioeconomic status; African American; black American; culture; family