The Unassuming Economist

From a paper by Hui Zhou, and De-Xin Zhang:

“Previous studies have focused on size metrics when exploring the economic consequences of financial development. However, the size of financial markets does not necessarily relate to their level of development. On the basis of cross-country panel data, we explore the impact of a new measure of financial development – stock market concentration – on income inequality. We find that concentrated stock markets dominated by a small number of large cap firms exacerbate income inequality. This impact strengthens with stock market activity, but foreign direct investment and financial inclusion mitigate this impact. The effect of stock market concentration on income inequality is more pronounced in countries with poor governance and stock market-based financial systems. Further research shows that stock market concentration remains significantly positively related to income inequality after controlling for the stability of large enterprises. Mechanism tests suggest that concentrated stock markets exacerbate income inequality by discouraging entrepreneurship and new businesses.”

From a paper by Angela Okeke, Constantinos Alexiou, and Joseph Nellis:

“We explore the long-term distributional consequences of fiscal adjustment episodes and the dynamic consequences of fiscal consolidation for countries with large sized consolidations vis-a-vis countries with small sized consolidations. In this direction, panel ARDL and impulse response functions using local projections are adopted for a panel of 16 OECD countries covering the period 1980 to 2019 based on a newly updated fiscal adjustment dataset, compiled by Gustavo Adler et al. (2024). The evidence suggests that adverse income disparities which tend to arise upon implementation of fiscal adjustments are dynamic and persist through the long run. While baseline results for the Gini suggest that long-term inequality levels hold at approximately the same as peak levels (by the 7th period), inequality measured by the bottom 40 income share appear to exhibit peak levels at the 14th period, suggesting a more persistent impact. Disaggregating impact by adjustment size, evidence is also offered for small-sized adjustment and large-sized adjustment countries showing that small-sized adjustments lead to gradual but prolonged inequality effects, while large-sized adjustments generate steeper but shorter-lived inequality increases.”

From a paper by Michael Lloyd:

“In April 2023, Jake Sullivan, in a speech to the Brookings Institute, formally announced the replacement of what had become known since the1990s as the Washington Consensus with a New Washington Consensus. This paper defines and briefly describes the original Washington Consensus. It goes on to describe and discuss in detail the New Washington Consensus and its implications. Finally, the paper outlines the potential Trump approach to this specific Biden legacy, whether or not acknowledged. The broad geoeconomic and geopolitical implications of the unwinding of what is likely to transpire are explored briefly in the context of the Trump Presidency.”

From a paper by Anita Szymanska, and Małgorzata Zielenkiewicz:

“Growing income inequality currently poses a significant threat to sustainable development.
Hence, it is important to monitor this phenomenon, in particular to identify determinants favouring
the deepening of income inequality. One of the significant determinants in this respect is the declining
labour income share in national income. The theoretical justification of the presumption of a negative
relationship between the share of labour in the national income and income inequality has strong
logical foundations. Existing studies indicate, however, some ambiguities as to the strength of this
relationship and the existence of various factors cancelling this relationship. The following study
attempts to verify the existence, direction, and intensity of the relationship between the labour
income share and income inequality in a relatively homogeneous group of 33 OECD countries
studied in 1990–2018. The main hypothesis verified in the study is the assumption that there is
a negative relationship between labour share and income inequality. Our results show that the
relationship between the share of employees’ and self-employed workers’ income in the national
income and income inequality at the general level (i.e., in a group study of 33 countries in total) exists,
is negative and statistically significant, but has a very small share in explaining the behaviour of
income inequality.”

From a paper by Shuang Ma, Baoling Mo, and Xiaoyu Meng:

“We examine the impact of minimum wage increases on labor self-funded training by first constructing a theoretical model that explores the effects under both perfectly and imperfectly competitive market conditions. We then empirically analyze the impact using data on training enterprise registrations and household spending on training. Theoretically, we find an increase in the minimum wage is expected to suppress demand for low-skilled labor, leading affected workers to engage in self-funded training to compete for a limited number of job positions. Empirically, a minimum wage increase significantly boosts the number of newly registered training enterprises and household expenditures on skill training. Mechanism analysis reveals that a higher minimum wage increases labor costs for enterprises, leading them to raise skill requirements during recruitment, thereby encouraging job market participants to pursue self-funded skill training.”