FEEM working papers "Note di lavoro" series
2020 .22

Nonlinearities and the Determinants of inequality: New panel evidence


Authors: Antonio Francesco Gravina, Matteo Lanzafame
Series: 2030 Agenda
Editor: Sergio Vergalli
Keywords: Inequality, globalisation, technology, finance, nonlinearity, panel data
JEL n.: C01, C33, F63, O11, O15, O33

Abstract

Relying on data for a panel of 90 economies over 1970-2015 and System-GMM estimates, we extend the standard Kuznets-curve empirical framework to investigate how financial development, globalisation and technology affect income inequality. Our findings reveal the presence of significant nonlinearities, consistent with either U-shaped or inverted Ushaped relationships. As such, depending on whether a certain threshold value is achieved, the same determinants of income distribution can exert opposite effects in different countries. Globalisation is associated to increasing inequality in most advanced economies, but to falling disparities for the large majority of emerging economies. Further, while the effects for advanced economies are mixed, technology and financial development lead to increasing inequality for most emerging economies. Hence, particularly in countries in earlier stages of development, policymakers aiming at fostering growth via technological progress or financial development should also consider the nature of the trade-offs with inequality and how policy can improve them.

***

Suggested citation: Gravina A. F, Lanzafame M., (2020), 'Nonlinearties and the Determinants of inequality: New panel evidence', Nota di Lavoro 22.2020, Milano, Italy: Fondazione Eni Enrico Mattei

Download file
Download PDF file

FEEM Newsletter & Update

Subscribe to stay connected.

Your personal data will be processed by Fondazione Eni Enrico Mattei. – data Controller – with the aim of emailing the FEEM newsletter & Update. The use of Your email address is necessary for the implementation of the newsletter service. You are invited to read the Privacy Policy in order to obtain additional information about the protection of Your rights.

This Website uses technical cookies and cookie analytics, as well as “third party” profiling cookies.
If you close this banner or you decide to continue navigating on this Website, you express consent to the use of cookies. If you need additional information or you wish to express selective choices on the use of cookies, please refer to the   Cookie PolicyI agree