Escuela de Finanzas, Economía y Gobierno

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Examinando Escuela de Finanzas, Economía y Gobierno por Materia "Absolute Inequality"

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    Ítem
    Absolute Income Inequality and Rising House Prices
    (Universidad EAFIT, 2016-12-01) Goda, Thomas; Stewart, Chris; Torres García, Alejandro; tgoda@eafit.edu.co; atorres7@eafit.edu.co
    Income inequality and house prices have risen sharply in developed countries during the last three decades. We argue that this co-movement is no coincidence but that inequality has driven up house prices on the grounds that it raises the total demand for houses, which inflates their prices considering supply restrictions. To test this hypothesis, we conduct cointegration tests for a panel of 18 OECD countries for the period 1975-2010. The results suggest that income inequality and house prices in most OECD countries are positively correlated and cointegrated, and that in the majority of cases absolute inequality Granger-causes house prices when measured in absolute terms. Relative inequality, on the other hand, is not cointegrated with house prices, which is expected given that total house demand depends on the absolute amount of investible income.
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    Absolute Inequality and Violent Property Crime
    (Universidad EAFIT, 2016-08-22) Goda, Thomas; Torres, Alejandro; tgoda@eafit.edu.co; atorres7@eafit.edu.co
    Rational choice models argue that income inequality leads to a higher expected utility of crime and thus generates incentives to engage in illegal activities. Yet, the results of empirical studies do not provide strong support for this theory; in fact, Neumayer provides apparently strong evidence that income inequality is not a significant determinant of violent property crime rates when a representative sample is used and country specific fixed effects are controlled for. An important limitation of this and other empirical studies on the subject is that they only consider proportional income differences, even though in rational choice models absolute difference in legal and illegal incomes determine the expected utility of crime. Using the same methodology and data as Neumayer, but using absolute inequality measures rather than proportional ones, this paper finds that absolute income inequality is a statistically significant determinant of robbery and violent theft rates. This result is robust to changes in sample size and to different absolute inequality measures, which not only implies that inequality is an important correlate of violent property crime rates but also suggests that absolute measures are preferable when the impact of inequality on property crime is studied.