Laboratories of (In)equality? Redistributive Policy and Income Inequality in the American States

Prior literature has emphasized demographic, economic, and political explanations for increasing income inequality in the United States, with little attention paid to the role of state‐level policy. This is despite great variation across states in both the level of inequality and the rate at which it is rising. This paper asks whether differences in state policy choices can help explain this variation; specifically, we examined a range of state redistributive policies enacted between 1980 and 2005 and identified four common approaches likely to impact inequality: taxes on the wealthy, taxes on the poor, spending on the poor, and labor market policies. We used pooled cross‐sectional time‐series data and a fixed‐effects model to assess the relationship between states’ use of each policy approach and two measures of market income inequality: the Gini coefficient and the income share of the top 1 percent. We find policies played a significant role in shaping income inequality in the states. For three of these four policy approaches, we found less inequality following expansions of state redistributive policy. Yet, for another, we identified the opposite pattern. These findings highlight the importance of state policy choices in shaping market inequality, and have implications for designing state policies to reduce income inequality since the success of these efforts depends on the policy approach used to redistribute income and wealth.     

Local Financial Institutions and Income Inequality: Evidence from Brazil's Credit Cooperative Movement

Local financial institutions can play a crucial role in reducing income inequalities at the within-country level by promoting inclusive economic growth and development across time and space. This is against a backdrop of increasing financial and economic fragility, to which emerging economies have also been exposed over more recent decades and years. This article adds emerging economy evidence from Brazil to an empirical literature on the income inequality implications of cooperative financial institutions. Panel-data estimations for 2004‒19 reveal that Brazilian credit cooperatives have gone beyond commercial banks in supporting communities that have traditionally been underserved financially. Additionally, the article provides new evidence and insights on credit cooperatives’ resilience in the context of a relatively recent but severe economic crisis in Brazil. The results indicate that credit cooperatives have helped fill gaps in finance and economic opportunity that tend to arise in an emerging economy setting. Furthermore, the contribution of credit cooperatives in filling these gaps is found to be more significant at lower levels of development. These findings add theoretical and, importantly, empirical support to the relationship channel of financial inclusion, which is in line with the optimistic perspective in this debate.     

Social class and wealth inequality in Italy over 20 years, 1993–2014

Italy is facing its worst economic crisis since the Second World War. As many studies have already shown, the crisis is affecting the country’s social class structure, thus accentuating several inequality tendencies. In this connection, the empirical purposes of this article are twofold: (1) to analyze whether accumulation and inequality in wealth are growing or declining in absolute terms; and (2) to investigate the relationship between social class and wealth inequality. To this end, we adopt a longitudinal approach – that is, we take the 1993–2014 period into account – by using data from the Italian Survey of Household Income and Wealth. Our findings suggest that overall net worth has trended down in the years following the beginning of the crisis, and that inequality in wealth has basically been increasing during the 20-year period, with a decline from 2012. However, there has been no persistent social splitting process in wealth distribution by social class. Rather, there is a high (and increasing) level of domestic differentiation in terms of household wealth by class, mainly within the lower class and self-employed middle class, which could put further stress on social cohesion standards and allow new forms of social vulnerability to emerge.     

EDUCATION AND INCOME INEQUALITY IN THE REGIONS OF THE EUROPEAN UNION*

ABSTRACT This paper provides an empirical study of the determinants of income inequality across regions of the EU. Using the European Community Household Panel dataset for 102 regions over the period 1995–2000, it analyses how microeconomic changes in human capital distribution affect income inequality for the population as a whole and for normally working people. The different static and dynamic panel data analyses conducted reveal that the relationship between income per capita and income inequality, as well as between a good human capital endowment and income inequality is positive. High levels of inequality in educational attainment are also associated with higher income inequality. The above results are robust to changes in the definition of income distribution and may be interpreted as a sign of the responsiveness of the EU labor market to differences in qualifications and skills. Other results indicate that population ageing, female participation in the labor force, urbanization, agriculture, and industry are negatively associated to income inequality, while unemployment and the presence of a strong financial sector positively affect inequality. Finally, income inequality is lower in social‐democratic welfare states, in Protestant areas, and in regions with Nordic family structures.     

What If Piketty Is Right? Real Economic Costs of Rising Income Inequality

Thomas Piketty's analysis of income and wealth distribution, Capital in the Twenty-First Century, argues that wealth has become increasingly concentrated in the hands of the most affluent, while lower and middle class real incomes have stagnated; he warns that this trend could have “potentially terrifying” results, possibly even violent revolution. This article presents evidence that growing inequality weakens the entire economy by eroding the purchasing power of the vast majority of the population and the education of the labor force, while increasing its vulnerability to future collapses of the financial markets. It agrees with Piketty's concern that the capitalist market system, driven by Adam Smith's classic reliance on the pursuit of individual self-interest, lacks mechanisms to correct these distortions, which must be addressed by new policy initiatives.     

INCOME INEQUALITY,ECONOMIC GROWTH,AND THE DISTRIBUTION OF INCOME GAINS: EVIDENCE FROM THE U.S. STATES*

ABSTRACT This paper first investigates a relationship between economic growth and income inequality using U.S. states data, a state cost‐of‐living deflator, and nonlinearity. It then explores the distribution of income gains among different income groups. We find that the impact of inequality on growth is nonlinear. Lowering inequality or increasing it substantially reduces growth; thus stable inequality may be good for growth. Economic growth affects incomes of the poor, the middle‐income group, and the rich similarly with the elasticity of one. Education and labor market policies become important in promoting growth and improving income gains of the poor.     

Bingo or fiasco? The global financial situation is not guaranteed

The 1998 Russian debt default following the Asian financial crisis sent a signal to global capital markets that no country from now on could be seen as 'too big to fail'. The concern which followed Russia's crisis raised two questions: first, with regard to the relevance of the interest rate in the presence of highly lever-aged securities; and second, over the question of the protection of a country or institution from bankruptcy while simultaneously making sure that any rescue would not encourage either further risk-taking from investors or more badly managed policies from emerging market economies. Moreover, the moral hazard question, coupled with the sheer size of private capital flows, led international institutions to consider involving the private sector in solving financial crises. This article describes why a situation has now been reached where no future guarantee can be given to countries or financial institutions, implicitly or explicitly, that their debts will be bailed out.     

Exchange Rate Policy and the Central and East European Financial Crisis

A prominent specialist on economic developments in the former Soviet Union and Central and Eastern European (CEE) countries examines the ways in which the global financial crisis of 2008-2010 has impacted the economies of the 10 new eastern member states of the European Union (CEE-10). The author assesses the multiple preconditions of the crisis (e.g., excessive current account deficits, large foreign debt, inadequate currency reserves, immense credit expansion, rising inflation and real estate prices) as well as the rapid financial adjustments that had to be undertaken to overcome it (e.g., current account rebalancing, reducing budget deficits, pension and fiscal reform). He devotes considerable attention to the key issue of how the differences in exchange rate policies in these countries affected their abilities to respond to the crisis and outlines measures that should be implemented to enhance the crisis management capability of non-eurozone states relying on currency boards or floating exchange rates.     

Global Restructuring,the Welfare State and Urban Programmes: Federal Policies and Inequality within Australian Cities

This paper is a prelude to a theme issue in 2003 on Australasian city and regional problems and policies. It considers the impact of economic restructuring on the level of inequality and disadvantage within Australian cities. Evidence is presented that Australian cities have become more unequal over the past two decades and this greater level of inequality has found concrete expression within the built environment. These patterns of inequality are distinct to Australia. It is argued that the Australian Government's reliance on tightly targeted income support policies and market-based solutions to economic disadvantage has contributed greatly to the concentration of low income and vulnerable households within certain sections of Australian cities.     

Income Inequality,Welfare and Poverty in Ukraine

Ukraine is now faced with economic crisis on an unprecedented scale. The country is on the brink of hyperinflation. The government has to follow rigorous demand management policies which entail lowering the standard of living of the population. To design policies which protect the poorest and most vulnerable groups in the society, it is important to understand the nature of poverty and income inequality. This study attempts to do exactly this for Ukraine for the first time. The paper demonstrates that the standard of living in Ukraine has been falling at an alarming rate. The government welfare programmes are ineffective in protecting the poorest and most vulnerable groups in the society. This article provides an empirical basis to design appropriate policies, but a lot more work needs to be done.     

Political Economy of Income Distribution: A Comparative Study of Taiwan and Mexico

Both Taiwan and Mexico have experienced remarkable economic growth since the 1960s. Taiwan demonstrates that higher income level can be accompanied by falling income inequalities. However, unlike Taiwan, the course of economic growth in Mexico has left the country with a very unequal distribution of income. This paper compares the government policies of income distribution in Mexico and Taiwan and identifies the factors contributing to the success of Taiwan and to the highly uneven income distribution in Mexico. The paper concludes that market-oriented growth does not automatically reduce inequality or poverty. The prospects for better income equity and sustainable economic development would be greatly enhanced through implementation of policies aimed at redistributing land and skills, facilitating small enterprises, and increasing domestic saving.     

Understanding Chinese Consumption: The Impact of Hukou

Since the onset of the economic reforms more than three decades ago, the Chinese growth miracle has been based on exports and investment. While strong output growth was maintained even during the financial crisis, imbalances within the country increased. To return to a more sustainable development path, recent government policies have aimed to improve the role of private consumption. This article argues that China's institutional framework is an impediment to this strategy, as it weakens the incentives of households to consume. As well as a low level of social security and highly regulated financial markets, the authors stress the relevance of the hukou system as the main driver for modest consumption, especially in recent years. After controlling for different income levels, the average propensity to consume is found to be significantly lower for migrants, as their access to public services is limited. If not accompanied by relevant reforms, the urbanization strategy of the government is likely to raise the number of migrants with limited hukou rights, further increasing the downward pressure on consumption. Therefore, in the absence of reforms in the household registration system, the shift towards consumption‐driven growth is at risk.     

Financial Inclusion or Subordination? The Monetary Politics of Debt in Cambodia

Financial inclusion is a leading driver of household debt across the global South. Although critical geographers have analysed this debt through the lens of financialisation, few have examined it in terms of monetary politics. This is a salient issue, because poorer nations often have limited control over their monetary policy due to their dependence on foreign currencies, which can adversely affect the structure of their financial markets. Building on the concept of monetary dependency from scholarship on financial subordination, I analyse the monetary politics of debt in Cambodia. Drawing on elite interviews and ethnographic research, I argue that Cambodia's extreme monetary dependence on the US dollar has shaped monetary and fiscal policies that compel poorer households to take on private debt to pay for their basic needs. This paper advances critical geographies of debt and development by studying financial subordination and its impact on financial inclusion in the global South.     

Economic inequality in Australia: A reassessment

This article reviews and analyses the evidence on the distribution of income and wealth in Australia since the 1960s. A number of scholars – most prominently among them Thomas Piketty – suggest that inequality has been increasing across the advanced capitalist world. Kuznets’ benign picture of an ‘inverted u-curve’ depicting declining inequality in modern industrial society is replaced with an altogether different and potentially quite alarming one. Does this hold for Australia? Surveying 25 income trend and 17 wealth distribution studies, we draw on the best available evidence and find that overall there has been far less of a rising inequality trend than is often assumed or argued.

本文分析了1960年代以来澳大利亚的收入及财富分配。有一些学者——其中最著名的是托马斯·皮凯提——认为所有发达资本主义国家的不平等都在加大。库兹涅倒U曲线所描绘的近代工业社会不平等不断减弱的美丽图画被一个全然不同、令人震惊的景象所取代。那么澳大利亚也是这样么？笔者考察25种收入趋势、17种财富分配的研究后发现,总的来说,不平等远并不像人们所常说的那样增加。     

Sparse,Inconsistent and Unreliable: Tax Records and the World Inequality Report 2018

This article reviews the World Inequality Report 2018, a large collaborative data project based on the work of Thomas Piketty and the late Anthony Atkinson, which critiques the entire literature of inequality measurement from survey data and purports to provide superior, unprecedented and reliable coverage of income and wealth inequalities over the entire world, based primarily on tax records. The article examines three major issues: the coverage provided by tax data in the world economy, the consistency of tax data with other sources of information on income inequality, and the peculiarities of tax‐based measurement of inequality in the United States. Then a comparison is made with measures drawn from other forms of administrative data — specifically payroll records — which are generally more consistent with records of inequality measured in household surveys than are tax records. Following this, the article discusses the analysis of wealth and wealth inequality before offering a few closing remarks about policy.     

The stretched rubber band: banks,houses, debt and vulnerability in Australia

This article analyses the development of residential capitalism and financialisation in Australia. It outlines the series of economic vulnerabilities developing in the financial system, centred on household debt and inflated property markets. It then analyses why policy-makers have done so little to restrict the growth of household debt and house prices. I argue that financial policy-makers have underestimated the financial vulnerabilities building up in Australia – as evidenced by the slow take-up of macroprudential policies. I outline four reasons: first, the excellent profit performance of the major banks; second, the policy predilection for idealised economic liberal regulation; third, the development of a politico-housing complex; and, finally, the growing role of household debt in ameliorating distributional conflict by underpinning growth.     

Averting a global financial crisis: the US,the IMF,and the Mexican debt crisis of 1976

This article explains the politics and diplomacy of the initial use of an International Monetary Fund (IMF) adjustment program as a tactic in a strategy to avert a possible global banking crisis. Scholars typically date the strategy to the Reagan administration's response to the sovereign debt crises in Eastern Europe and Latin America in the early 1980s. This article demonstrates that the approach originated instead during the 1976 Mexican debt crisis – the first potential postwar default by a developing country that threatened international bank failures. Key US and Mexican officials recognized that an IMF program of currency devaluation and austerity would probably fail in its stated objective of reducing Mexico's balance of payments deficit. Nevertheless, US Treasury and Federal Reserve officials, fearing that a Mexican default might lead to bank failures and subsequent global financial crisis, intervened to an unprecedented degree in the negotiations between the IMF and Mexico. The United States offered direct financial support and worked through diplomatic channels to insist that Mexico accept an IMF adjustment program, as a way of bailing out US banks. Mexican president Luis Echeverría's administration consented to IMF adjustment because officials perceived it as the least politically costly option among a range of alternatives.     

Documenting the indignation: Responses to the 2008 financial crisis in contemporary Spanish cinema

ABSTRACT

The aim of this article is to analyze two Spanish documentary films that reflect on the 2008 financial crisis in Spain, Mercado de futuros (Mercedes Álvarez, 2011) and No estamos solos (Pere Joan Ventura, 2015). These movies could be marked as political for their choice of a collective protagonist and for dealing with the issues of inequality with the purpose of appealing to mobilization and resistance to the neoliberal Western agenda that have provoked social cutbacks after the 2008 crisis. Mercedes Álvarez and Pere Joan Ventura follow the tradition of political documentaries traced by filmmakers such as Dziga Vertov, Joris Ivens, Pere Portabella, and Basilio Martín Patino and open the debate on how people can contribute to searching for renewal policies in times of crisis.     

Residential property disparities in city districts in Prague,Czech Republic

City districts are often classified as ‘rich’ or ‘poor,’ a phenomenon that occurs within cities all over the world. While income inequality, wealth inequality, and other kinds of social inequality are frequently tracked, there is a surprising lack of research concentrating on how social inequality manifests as differences between parts of cities, especially outside of the U.S. That is mostly due to insufficient available data. In this paper, we propose a methodology for measuring the relative inequality between city districts by using the average prices of residential properties in various parts of the city, and assessing their relative difference. This approach has several advantages, as property listings are often readily available even in cities where income data is not. This methodology has potential for measuring developments in inequality in a much wider range of cities. As a proof of concept, we apply this methodology to property prices in Prague during the period 2003–2012 to identify a trend of either growing or decreasing inequality among individual parts of the city. We have found that during this period the disparity has grown only 5.97%, which means the overall growth of disparity between the city districts was negligible.     

Debt Cancellation in the Classical and Hellenistic Poleis: Between Demagogy and Crisis Management

Abstract

This article discusses the way the ancient Greeks dealt with public and private debts, focusing on one specific aspect: debt cancellation. On the one hand, ancient Greeks were aware of the risks entailed in debt relief as a tool for fuelling civic strife: sources describe it as a demagogic or even criminal action often in association with the political agenda of tyrants. On the other hand, however, Greeks knew well also the benefic effects of debt cancellation in coping with financial and political crisis. In late accounts of archaic history, debt relief is the solution to civic strife and the foundation act of political order. Some public decrees of the Hellenistic period attest debt relief as a communal decision of the polis, dictated by the necessity of preventing or solving ongoing or imminent crises. This second meaning and purpose of debt cancellation should perhaps urge us to reconsider from a different perspective the “politics of debt” in today’s Europe.