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    Impact of Macroeconomic Factors on Income Inequality and Income Distribution in Asian Contries

    Deyshappriya, N. P. Ravindra | March 2017
    Abstract
    This study examines the macroeconomic determinants of income inequality using dynamic panel data analysis. Specifically, the study employs dynamic panel data analysis based on the generalized method of moments over 1990–2013 across 33 Asian countries. The World Bank data series was widely used as data for macroeconomic variables while the Gini index was collected from the World Income Inequality Database. In addition to the macroeconomic factors, the study incorporates a series of political economic and demographic factors to provide more realistic estimates. The study found an inverted U-shaped (parabolic) relationship between gross domestic product (GDP) and inequality, supporting the well-known concept, the Kuznets curve. Apart from that, official development assistance (ODA), education, and labor force participation reduce inequality while higher inflation, political risk, terms of trade, and unemployment increase inequality in Asian countries. The study further observed that an initial increase in GDP redistributes income from the bottom 20% of people to the middle class and richest groups. However, further increases in GDP redistribute the income from the top 20% to middle-income and poor groups. Similarly, inflation, unemployment, terms of trade, and ODA are also significant factors of income distribution among Asian countries. This study recommends ensuring higher and steady long-term economic growth, and enhanced access to education and employment while maintaining price stability and political stability to sustain more equal income distribution followed by lower-income inequality in the region.
    Citation
    Deyshappriya, N. P. Ravindra. 2017. Impact of Macroeconomic Factors on Income Inequality and Income Distribution in Asian Contries. © Asian Development Bank Institute. http://hdl.handle.net/11540/7716.
    Keywords
    Income Distribution
    Demographic Indicators
    Social Justice
    Price stabilization
    Food prices
    Price policy
    Development Indicators
    Environmental Indicators
    Economic Indicators
    Educational Indicators
    Demographic Indicators
    Health Indicators
    Disadvantaged Groups
    Low Income Groups
    Socially Disadvantaged Children
    Poverty Analysis
    Participatory Poverty Assessment
    Poverty Reduction Strategy
    Extreme Poverty
    Economic development
    Growth And Poverty
    Macroeconomic
    Macroeconomic Analysis
    Macroeconomic Framework
    Macroeconomic Models
    Macroeconomic Performance
    Macroeconomic Planning
    Macroeconomic Policies
    Macroeconomic Reform
    Macroeconomic Stabilization
    Social change
    Social accounting
    Inequality of income
    Economic growth
    Qualilty of Life
    Open price system
    Price fixing
    Price regulation
    Consumer price indexes
    Show allCollapse
    Citable URI
    http://hdl.handle.net/11540/7716
    Metadata
    Show full item record
    Thumbnail
    adbi-wp696.pdf (480.5Kb)
    Author
    Deyshappriya, N. P. Ravindra
    Theme
    Poverty
    Economics

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    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise