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INCOME INEQUALITY AND INNOVATIVENESS: AN APPLICATION FOR EUROPEAN COUNTRIES

Year 2016, Volume: 66 Issue: 1, 67 - 82, 01.06.2016
https://doi.org/10.26560/iuifm.331698

Abstract








The major aim of this paper is to elaborate the relationship between tech-
nological change and income distribution for 18 developed EU countries.
A panel data model is estimated for the data covering the period between
1999-2014. The results suggest that, technological progress occurred in EU
countries works to the detriment of people who hold the top income shares.
Moreover, the institutional variable is found to increase income inequality.
The results underline some important lessons for developing countries. 




References

  • Acemoglu, D. (1998). Why Do New Technologies Complement Skills? Directed Technical Change and Wage Inequality. The Quarterly Journal of Economics, 113(4), 1055–1089. http://doi. org/10.1162/003355398555838
  • Acemoglu, D., Johnson, S., & Robinson, J. A. (2001). The colonial origins of comparative. The Economics of Cultural Transmission and the Evolution of Preferences,” The American Economic Review,91( 5) (Dec., 2001), pp. 1369-1401
  • Acemoglu, D. (2002). Cross-country Inequality Trends. NBER Working Paper No.8832 ,
  • Adams, S. (2008). Globalization and income inequality: Implications for Intellectual Property Rights. Journal of Policy Modeling, 30(5), 725– 735.
  • Aghion, P., Akcigit, U., Bergeaud, A., Blundel,B. &Hemous,D. (2015). Innovation and Top Income Inequality. NBER Working Paper No: 21247.
  • Antonelli, C., & Gehringer, A. (2013). Innovation and income inequality (No. 201324). University of Turin.
  • Baltagi, B. H. (2008). Econometric Analysis of Panel Data (Fourth ed.). Chichester, UK: John Wiley& Sons Ltd.
  • Brito, D. L., & Intriligator, M. D. (1981). The impact of technological change on the distribution of labor income. Department of Economics, University of California Working Paper No. 644.
  • Caselli, F. (1999). Technological revolutions. American Economic Review, 89,78-102.
  • Clark, T. S., & Linzer, D. A. (2015). Should I use fixed or random effects?. Political Science Research and Methods, 3(02), 399-408.
  • Ellis, L. & Kathryn S. (2007), “The Global Upward Trend in the Profit Share,” Basel, Bank for International Settlement, Working Paper No. 231.v
  • Eurostat., (2005), Eurostat Database, Retrieved from http://ec.europa.eu/ eurostat/data/database (Last Accession Date:29.11.2015)
  • Stockhammer., E. (2009) . Determinants of functional Income distribution in OECD countries.IMK Study, No. 5/2009, http://nbn-resolving.de/ (Last Accession Date: 29.11.2015)
  • Esquivel, G., & Rodríguez-López, J. A. (2003). Technology, trade, and wage inequality in Mexico before and after NAFTA. Journal of Development Economics, 72(2), 543–565. http://doi.org/10.1016/ S0304-3878(03)00119-6
  • European Commission. (2007). The Labour Income Share in the European Union. Employment in Europe, 237–272. Forbes, K. J. (2000). A Reassessment of the Relationship Between Inequaiity and Growth. The American Economic Review, 90(1995), 869–887.
  • Gancia, G. (2012). Globalization, Technology and Inequality. Els Opuscles del Crei, Barcelona, Online Available http://repositori.upf.edu/ bitstream/handle/10230/20832/1363.pdf?sequence=1 (Last Accession Date: 29.11.2015)
  • Greene, W. H. (2010). Econometric Analysis. (Seventh ed.).Essex,UK: Prentice Hall
  • Hémous, D., & Olsen, M. (2013). The Rise of the Machines: Automation, Horizontal Innovation and Income Inequality. Horizontal Innovation and Income Inequality (November). Retrieved from http://www.usc. edu/schools/business/FBE/seminars/papers/M_4-25-14_HEMOUS. pdf (Last Accession Date:29.11.2015)
  • IMF. (2007). The Globalization of Labor. World Economics Outlook, 44(2), 161–192. http://doi.org/10.2501/JAR -51-4-564-570 Jaumotte, F., Lall, S., & Papageorgiou, C. (2013). Rising Income Inequality: Technology, or Trade and Financial Globalization? IMF Economic Review, 61(2), 271–309. http://doi.org/10.1057/imfer.2013.7
  • Jayadev, A. (2007). Capital account openness and the labour share of income. Cambridge Journal of Economics, 31(3), 423–443.
  • Hoechle, D. (2007). Robust standard errors for panel regressions with cross-sectional dependence. Stata Journal, 7(3), 281.
  • Palme, J. (2006). Welfare states and inequality: Institutional designs and distributive outcome. Research in Social Stratification and Mobility, 24(4), 387–403. http://doi.org/10.1016/j.rssm.2006.10.004
  • Pesaran, M. H., (2004), “General Diagnostic Tests for Cross-Section Dependence in Panels,” mimeo, University of Cambridge.
  • Richardson, J. D. (1995). Income Inequality and Trade - How To Think, What To Conclude. Journal of Economic Perspectives, 9(3), 33–55.
  • Roine, J., Vlachos, J., & Waldenström, D. (2009). The long-run determinants of inequality: What can we learn from top income data? Journal of Public Economics, 93(7-8), 974–988.
  • Schumpeter, J. A. (1939). Business Cycles (Vol. 1, pp. 161-74). New York: McGraw-Hill.
  • Systemic Peace., (2013). Polity IV Project Dataset, Center for Systemic Peace. Retrieved from http://www.systemicpeace.org/inscrdata.html (Last Accession Date: 29.11.2015)
  • Toivanen, O., & Vaananen, L. (2012). Returns To Inventors. Review of Economics and Statistics, 94(4), 1173–1190.
  • United Nations.,(2014).2013 Human Development Report. Retrieved from http://hdr.undp.org/en/2013-report (Last Accession Date: 29.11.2015)
  • Weinhold, D., & Nair-Reichert, U. (2009). Innovation, Inequality and Intellectual Property Rights. World Development, 37(5), 889–901.
  • Wood, A. (1997). Openness and Wage Inequality in Developing Countries : The Latin American Challenge to East Asian Conventional Wisdom. The World Bank Economic Review, 11(1), 33–57. http://doi.org/10.1093/wber/11.1.33
  • World Bank.,(2015), World Development Indicators Database. Retrieved from http://databank.worldbank.org/data/reports.aspx?source=world- development-indicators (Last Accession Date: 29.11.2015)

INCOME INEQUALITY AND INNOVATIVENESS: AN APPLICATION FOR EUROPEAN COUNTRIES

Year 2016, Volume: 66 Issue: 1, 67 - 82, 01.06.2016
https://doi.org/10.26560/iuifm.331698

Abstract








The major aim of this paper is to elaborate the relationship between tech-
nological change and income distribution for 18 developed EU countries.
A panel data model is estimated for the data covering the period between
1999-2014. The results suggest that, technological progress occurred in EU
countries works to the detriment of people who hold the top income shares.
Moreover, the institutional variable is found to increase income inequality.
The results underline some important lessons for developing countries. 




References

  • Acemoglu, D. (1998). Why Do New Technologies Complement Skills? Directed Technical Change and Wage Inequality. The Quarterly Journal of Economics, 113(4), 1055–1089. http://doi. org/10.1162/003355398555838
  • Acemoglu, D., Johnson, S., & Robinson, J. A. (2001). The colonial origins of comparative. The Economics of Cultural Transmission and the Evolution of Preferences,” The American Economic Review,91( 5) (Dec., 2001), pp. 1369-1401
  • Acemoglu, D. (2002). Cross-country Inequality Trends. NBER Working Paper No.8832 ,
  • Adams, S. (2008). Globalization and income inequality: Implications for Intellectual Property Rights. Journal of Policy Modeling, 30(5), 725– 735.
  • Aghion, P., Akcigit, U., Bergeaud, A., Blundel,B. &Hemous,D. (2015). Innovation and Top Income Inequality. NBER Working Paper No: 21247.
  • Antonelli, C., & Gehringer, A. (2013). Innovation and income inequality (No. 201324). University of Turin.
  • Baltagi, B. H. (2008). Econometric Analysis of Panel Data (Fourth ed.). Chichester, UK: John Wiley& Sons Ltd.
  • Brito, D. L., & Intriligator, M. D. (1981). The impact of technological change on the distribution of labor income. Department of Economics, University of California Working Paper No. 644.
  • Caselli, F. (1999). Technological revolutions. American Economic Review, 89,78-102.
  • Clark, T. S., & Linzer, D. A. (2015). Should I use fixed or random effects?. Political Science Research and Methods, 3(02), 399-408.
  • Ellis, L. & Kathryn S. (2007), “The Global Upward Trend in the Profit Share,” Basel, Bank for International Settlement, Working Paper No. 231.v
  • Eurostat., (2005), Eurostat Database, Retrieved from http://ec.europa.eu/ eurostat/data/database (Last Accession Date:29.11.2015)
  • Stockhammer., E. (2009) . Determinants of functional Income distribution in OECD countries.IMK Study, No. 5/2009, http://nbn-resolving.de/ (Last Accession Date: 29.11.2015)
  • Esquivel, G., & Rodríguez-López, J. A. (2003). Technology, trade, and wage inequality in Mexico before and after NAFTA. Journal of Development Economics, 72(2), 543–565. http://doi.org/10.1016/ S0304-3878(03)00119-6
  • European Commission. (2007). The Labour Income Share in the European Union. Employment in Europe, 237–272. Forbes, K. J. (2000). A Reassessment of the Relationship Between Inequaiity and Growth. The American Economic Review, 90(1995), 869–887.
  • Gancia, G. (2012). Globalization, Technology and Inequality. Els Opuscles del Crei, Barcelona, Online Available http://repositori.upf.edu/ bitstream/handle/10230/20832/1363.pdf?sequence=1 (Last Accession Date: 29.11.2015)
  • Greene, W. H. (2010). Econometric Analysis. (Seventh ed.).Essex,UK: Prentice Hall
  • Hémous, D., & Olsen, M. (2013). The Rise of the Machines: Automation, Horizontal Innovation and Income Inequality. Horizontal Innovation and Income Inequality (November). Retrieved from http://www.usc. edu/schools/business/FBE/seminars/papers/M_4-25-14_HEMOUS. pdf (Last Accession Date:29.11.2015)
  • IMF. (2007). The Globalization of Labor. World Economics Outlook, 44(2), 161–192. http://doi.org/10.2501/JAR -51-4-564-570 Jaumotte, F., Lall, S., & Papageorgiou, C. (2013). Rising Income Inequality: Technology, or Trade and Financial Globalization? IMF Economic Review, 61(2), 271–309. http://doi.org/10.1057/imfer.2013.7
  • Jayadev, A. (2007). Capital account openness and the labour share of income. Cambridge Journal of Economics, 31(3), 423–443.
  • Hoechle, D. (2007). Robust standard errors for panel regressions with cross-sectional dependence. Stata Journal, 7(3), 281.
  • Palme, J. (2006). Welfare states and inequality: Institutional designs and distributive outcome. Research in Social Stratification and Mobility, 24(4), 387–403. http://doi.org/10.1016/j.rssm.2006.10.004
  • Pesaran, M. H., (2004), “General Diagnostic Tests for Cross-Section Dependence in Panels,” mimeo, University of Cambridge.
  • Richardson, J. D. (1995). Income Inequality and Trade - How To Think, What To Conclude. Journal of Economic Perspectives, 9(3), 33–55.
  • Roine, J., Vlachos, J., & Waldenström, D. (2009). The long-run determinants of inequality: What can we learn from top income data? Journal of Public Economics, 93(7-8), 974–988.
  • Schumpeter, J. A. (1939). Business Cycles (Vol. 1, pp. 161-74). New York: McGraw-Hill.
  • Systemic Peace., (2013). Polity IV Project Dataset, Center for Systemic Peace. Retrieved from http://www.systemicpeace.org/inscrdata.html (Last Accession Date: 29.11.2015)
  • Toivanen, O., & Vaananen, L. (2012). Returns To Inventors. Review of Economics and Statistics, 94(4), 1173–1190.
  • United Nations.,(2014).2013 Human Development Report. Retrieved from http://hdr.undp.org/en/2013-report (Last Accession Date: 29.11.2015)
  • Weinhold, D., & Nair-Reichert, U. (2009). Innovation, Inequality and Intellectual Property Rights. World Development, 37(5), 889–901.
  • Wood, A. (1997). Openness and Wage Inequality in Developing Countries : The Latin American Challenge to East Asian Conventional Wisdom. The World Bank Economic Review, 11(1), 33–57. http://doi.org/10.1093/wber/11.1.33
  • World Bank.,(2015), World Development Indicators Database. Retrieved from http://databank.worldbank.org/data/reports.aspx?source=world- development-indicators (Last Accession Date: 29.11.2015)
There are 32 citations in total.

Details

Subjects Business Administration
Journal Section Articles
Authors

Halil Tunalı

Fatih Şahan This is me

Publication Date June 1, 2016
Published in Issue Year 2016 Volume: 66 Issue: 1

Cite

APA Tunalı, H., & Şahan, F. (2016). INCOME INEQUALITY AND INNOVATIVENESS: AN APPLICATION FOR EUROPEAN COUNTRIES. İstanbul Üniversitesi İktisat Fakültesi Mecmuası, 66(1), 67-82. https://doi.org/10.26560/iuifm.331698
AMA Tunalı H, Şahan F. INCOME INEQUALITY AND INNOVATIVENESS: AN APPLICATION FOR EUROPEAN COUNTRIES. İstanbul Üniversitesi İktisat Fakültesi Mecmuası. June 2016;66(1):67-82. doi:10.26560/iuifm.331698
Chicago Tunalı, Halil, and Fatih Şahan. “INCOME INEQUALITY AND INNOVATIVENESS: AN APPLICATION FOR EUROPEAN COUNTRIES”. İstanbul Üniversitesi İktisat Fakültesi Mecmuası 66, no. 1 (June 2016): 67-82. https://doi.org/10.26560/iuifm.331698.
EndNote Tunalı H, Şahan F (June 1, 2016) INCOME INEQUALITY AND INNOVATIVENESS: AN APPLICATION FOR EUROPEAN COUNTRIES. İstanbul Üniversitesi İktisat Fakültesi Mecmuası 66 1 67–82.
IEEE H. Tunalı and F. Şahan, “INCOME INEQUALITY AND INNOVATIVENESS: AN APPLICATION FOR EUROPEAN COUNTRIES”, İstanbul Üniversitesi İktisat Fakültesi Mecmuası, vol. 66, no. 1, pp. 67–82, 2016, doi: 10.26560/iuifm.331698.
ISNAD Tunalı, Halil - Şahan, Fatih. “INCOME INEQUALITY AND INNOVATIVENESS: AN APPLICATION FOR EUROPEAN COUNTRIES”. İstanbul Üniversitesi İktisat Fakültesi Mecmuası 66/1 (June 2016), 67-82. https://doi.org/10.26560/iuifm.331698.
JAMA Tunalı H, Şahan F. INCOME INEQUALITY AND INNOVATIVENESS: AN APPLICATION FOR EUROPEAN COUNTRIES. İstanbul Üniversitesi İktisat Fakültesi Mecmuası. 2016;66:67–82.
MLA Tunalı, Halil and Fatih Şahan. “INCOME INEQUALITY AND INNOVATIVENESS: AN APPLICATION FOR EUROPEAN COUNTRIES”. İstanbul Üniversitesi İktisat Fakültesi Mecmuası, vol. 66, no. 1, 2016, pp. 67-82, doi:10.26560/iuifm.331698.
Vancouver Tunalı H, Şahan F. INCOME INEQUALITY AND INNOVATIVENESS: AN APPLICATION FOR EUROPEAN COUNTRIES. İstanbul Üniversitesi İktisat Fakültesi Mecmuası. 2016;66(1):67-82.