D31 - Personal Income, Wealth, and Their DistributionsReturn

This paper examines the relationship between financial stability and income inequality in 35 developing countries from 2004 to 2020 using system generalized method of mo- ments (GMM) estimation. Four dimensions of the financial sector, namely financial stability, depth, access and efficiency were included as regressors. The results for the relationship of each of the financial dimensions with income inequality are mixed. In this study, inequality increases with an increase in the stability of the financial sector; on the contrary, the depth of the financial sector reduces inequality. Furthermore, not only does the dimension of the financial sector matter in addressing income inequality issues, but the quality of institutions is important. It is important for policy makers to understand linkages between financial dimensions and inequality so as to come up with appropriate prudential regulatory mechanisms.

Annually the Common Agricultural Policy (CAP) provides support to the farming sector amounting to more than EUR 50 billion in the EU, of which direct payments (DPs) take around 70%. DPs are often argued to be granted unfairly to large farms. In this paper we analyse implications and the political economy of DP capping in Slovakia in the context of the ongoing negations about the future CAP reform. The simulation results for Slovakia show that if the 2018 Commission proposal was approved it would lead to losses of EUR 190.1 million (68% of total DPs) to large farms when labour costs are not subtracted. These losses would decrease to only EUR 12.2 million (4.4% of total DPs) when the labour costs are subtracted. Further, the results show that potentially affected large farms in Slovakia show lower performance and lower compliance with the agricultural policy objectives than farms unaffected by the DP capping. Similar to the past CAP reforms, the position of Slovakia against DP capping is expected to be maintained also in future, which could be explained by three main factors: the productivity argument, the political economy argument linked to the lobby pressure from large farms and low economic distortions caused by DPs.

In the 1990s, the transition countries in Central and Eastern Europe witnessed an upward trend in returns to education, unlike in Western European countries. This upward trend led to much higher returns than in what was observed in the communist period or compared to the West. The surveys EU-SILC collected since 2005 show that although returns to tertiary education were converging across Europe, there is still a big difference between East and West, with returns considerably higher in the East. Panel analysis reveals also substantial differences in the factors behind returns to tertiary education in the East and the West. The assumed negative relationship between the share of tertiary-educated workers in the working-age population and the returns to tertiary education were confirmed only in the West. The job vacancy rate has a significant negative impact on returns to tertiary education only in the East. While in the West the labour market seems to react more to labour supply, in the East labour demand plays a more important role.

The aim of this paper is to examine the relationship between inflation and income inequality. The article is mainly theoretical, but considerations presented are illustrated by relevant empirical data. Based on our analysis, we claim that inflation, which accelerated after the collapse of the Bretton Woods system in 1971, could have contributed to the rise in income inequality in the USA since the 1970s. Our article transcends the simple notion of an inflation tax and focuses on other redistributive mechanisms of inflation (Cantillon effect) as one of the main causes of income inequality.

This article aims to analyse the distributional impacts of the meal voucher system in the Czech Republic, especially concerning income inequality. It analyses the redistributive effects of meal allowances on various income deciles providing rough estimates of the impact of meal allowance tax exemption on the government budget and simulating several scenarios for the replacement of the current meal allowance scheme with flat meal allowances. We estimate that meal allowance tax relief represents a direct burden of around 11.3 billion Czech korunas for the state budget, although this approximation does not take indirect effects into account and could thus be an overestimate. We provide evidence which suggests that the current form of meal allowances widens the income gap between beneficiaries and non-beneficiaries, within as well as across the income deciles. Affluent households receive meal allowances more frequently, and, moreover, the allowances they receive are both nominally and proportionately higher. According to our simulation using a constant budget of the size of our rough estimate replacing the current meal allowance scheme with a flat meal allowance system would promote income equality. Such a change would benefit the lower deciles, due to a higher share of individuals in these deciles being entitled to meal allowances, while the upper decile households would see a decline in their meal allowances.

The present paper deals with the development of wage distribution by educational attainment in the Czech Republic in the years 2003-2012, analysing fifty wage distributions as the object of research and the gross monthly wage in CZK as the research variable. It examines the development of wage distribution in time and the gross monthly wage in relation to the level of educational attainment. It also pursues the development of the minimum wage in the monitored period. The author pays special attention to the lowest guaranteed wage levels classified according to wage classes and work capability assessment, comparing the minimum wage to the wage of subsistence. The forecasts of future wage distribution are an integral component of the research, the financial standing of Czech households being evaluated in an international context within the European Union.

A new good quality standardized data set for cross-national comparisons of income inequality covering 147 countries has been constructed. The Bayesian model averaging and multiple imputation approach have been used to identify robust correlates from a larger pool of potential predictors of cross-national variation in inequality determined from previous literature. The results document signiicant macro-regional speciicity both regarding levels and predictors of inequality. While globalization associates with lower inequality in Western countries, it has opposite e ects in Latin America, Sub-Saharan Africa or post-communist countries. Age structure, the extent of social spending, or colonial history are another important factors with regionally speciic impacts on inequality. By contrast, explanative power of some other traditional determinants of inequality has not been corroborated.

The American financial crisis, which started in 2007, triggered subsequently a global economic decline. To boost the decreasing national economies, many countries introduced various stipulating measures. The automotive industry has been among the numerous fields, which were affected by the decline. The proclaimed importance of this industry led to the introduction of a new economic tool to support the short-term consumption, usually referred to as the car scrapping scheme. This scheme stands for a special incentive to purchase a new car. Usually, the incentive is introduced in the form of a direct financial support or an ex-post tax relief, and is conditioned by scrapping the applicant's old car. The microeconomic analysis of consumer behaviour proved that the car scrapping scheme can mitigate the maximum decline of the aggregate consumption, thanks to the shift of the consumption line and of the map of the indifference curves. However, the car scrapping scheme has many other impacts, whose research should be elaborated.

The changing social status of pensioners is described and structured according to stylized periods. First, I identify the salient features of the communist regime that shifted pensioners to the margins of society. Second, I attempt to trace how the position of pensioners changed as a result of the democratic transition, which empowered pensioners as voters and which led to their rising relative income. Third, I review the recent debate about pension reform - which, as an unresolved issue, has entailed the maintenance of the status quo - and pensioners' swing towards the left. Fourth, the possible impact of current reform proposals on the future income of pensioners are considered. In conclusion, the importance of bringing children back into the pension system and increasing the activity rate of older persons are stressed.