This book aims to empirically and theoretically study how income inequality and demographic change affected fiscal policy and subsequent economic growth globally in the past decades from four perspectives. First, it briefly reviews the dynamic changes of income sources that contribute to inequality. Second, it distinguishes between income inequality induced by differences in labor productivity and income inequality induced by differences in capital income. Third, it briefly reviews the dynamic changes of tax composition in the age of demographic change. Last, it discusses the impacts of changes in age structure on the extent of taxes on income relative to expenditure. This book offers a comprehensive discussion to understand and analyze the reason, performance and challenge of fiscal policy and economic growth from the perspective of inequality and demographics.In addition to students, teachers and researchers in the areas of equity, demography, political economy and economic policy, this book is also of great interest to policy makers, planners and non-government agencies who are concerned with understanding and addressing poverty-related and aging-related issues in developed and developing countries.
Author(s): Weijie Luo
Series: Applied Economics and Policy Studies
Publisher: Springer
Year: 2023
Language: English
Pages: 267
City: Singapore
Foreword
References
Preface
References
Acknowledgements
Contents
List of Figures
List of Tables
Part I Inequality and Fiscal Policy
1 Inequality and the Size of US State Government
1.1 Introduction
1.2 Literature Review
1.2.1 Taxation Encouraging Effects of Inequality
1.2.2 Taxation Damaging Effects of Inequality
1.2.3 Recent Development in the Study of Inequality
1.3 Data and Methodology
1.4 Empirical Results
1.4.1 Baseline Estimation
1.4.2 Instrumental Variables Estimation
1.4.3 Robustness and Heterogeneity
1.4.4 Summary
1.5 Conclusion
References
2 Inequality and Government Size: A Political Economy Theory and OECD Evidence
2.1 Introduction
2.2 The Model
2.2.1 Economic Environment
2.2.2 The Median Voter's Choice of Tax Policy
2.2.3 Capital Income Inequality and Redistribution
2.3 Data and Econometric Specification
2.4 Evidence
2.4.1 Panel Estimation
2.4.2 Instrumental Variables Estimation
2.5 Conclusion
References
3 Inequality and Government Debt
3.1 Introduction
3.2 Data and Econometric Specification
3.3 Evidence
3.3.1 Baseline Estimation
3.3.2 Instrumental Variables Estimation
3.3.3 Robustness
3.4 Conclusion
References
Part II Demography and Fiscal Policy
4 Population Aging and the Composition of Taxes: A Political Economy Theory
4.1 Introduction
4.2 Background and Related Literature
4.3 The Economic Environment
4.4 Political-Economy Equilibrium: The Choice of Tax Policy
4.4.1 Income Taxes
4.4.2 Expenditure Taxes
4.4.3 The Composition of Taxes
4.5 Conclusion
4.5.1 Summary
4.5.2 Further Research Directions
References
5 Population Aging and the Composition of Taxes: Evidence from International Panel Data
5.1 Introduction
5.2 Data and Econometric Specification
5.3 Evidence
5.3.1 Baseline Estimation
5.3.2 Further Estimation
5.4 Conclusion
References
6 Youthful Dependents and the Composition of Taxes
6.1 Introduction
6.2 The Model
6.2.1 Theoretical Framework
6.2.2 Demographic Structure and Tax Preference
6.3 Evidence
6.3.1 Data and Methodology
6.3.2 Baseline Estimation
6.3.3 Heterogeneous Analysis
6.3.4 Income Taxes
6.3.5 Expenditure Taxes
6.3.6 Robustness
6.4 Conclusion
References
7 Demography and Government Debt
7.1 Introduction
7.2 Literature Review
7.2.1 Effects of Population Aging
7.2.2 Public Debt
7.3 Data and Methodology
7.4 Empirical Results
7.4.1 Baseline Estimation Results
7.4.2 Further Estimation Results
7.5 Conclusion
References
Part III Short- and Medium-Term Perspective
8 Inequality and Economic Growth: A Literature Review
8.1 Introduction
8.2 Literature Review
8.2.1 Effects of Economic Growth on Inequality
8.2.2 Effects of Inequality on Growth
8.2.3 Effects of Inequality on Growth
8.3 Conclusion
References
9 Inequality and Economic Growth in the Twenty-First Century
9.1 Introduction
9.2 The Model
9.2.1 Economic Environment
9.2.2 Capital Income Inequality and Growth
9.3 Evidence
9.3.1 Data and Econometric Specification
9.3.2 Panel Estimation
9.3.3 Robustness and Further Estimation
9.3.4 Generalized Method of Moments Estimation
9.4 Conclusion
References
10 Demography and Economic Growth: The Effect of Tax Composition
10.1 Population Aging and Economic Growth
10.1.1 Introduction
10.1.2 Data and Econometric Specification
10.1.3 Baseline Estimation Results
10.1.4 Further Estimation Results
10.1.5 Conclusion
10.2 Youthful Dependents and Economic Growth
10.2.1 Introduction
10.2.2 Data and Methodology
10.2.3 Baseline Estimation Results
10.2.4 Instrumental Variables Estimation
10.2.5 Further Estimation Results
10.2.6 Conclusion
References
11 Tax Composition and Economic Growth in the Age of Demographic Change
11.1 Introduction
11.2 Literature Review
11.3 Materials and Methods
11.4 Results
11.4.1 Contemporary Effects
11.4.2 Dynamic Effects
11.4.3 System Generalized Method of Moments Estimation
11.5 Discussion
References
Part IV Re-thinking of the Malthusian Trap
12 Demography and Income Inequality
12.1 Introduction
12.2 Data and Econometric Specification
12.3 Empirical Results
12.3.1 Baseline Estimation
12.3.2 Further Estimation
12.3.3 Mechanism
12.4 Conclusion
References
Appendix A Labor Income Inequality, Taxation and Growth: A Political Economy Theory
A.1 Economic Environment
A.2 Political-Economic Equilibrium
A.3 Labor Income Inequality and Growth
Appendix B Capital Income Inequality, Taxation and Growth: A Political Economy Theory
B.1 Economic Environment
B.2 The Median Voter's Choice of Tax Policy
B.3 Capital Income Inequality and Growth
Appendix C Alternative Measure of Inequality and Growth: Evidence from OECD Countries
C.1 Data and Econometric Specification
C.2 Panel Estimation
C.3 Further Estimation
C.4 Sensitivity Analysis
Appendix D Demography and Taxation: Further Global Evidence
D.1 Data and Descriptive Statistics
D.2 Panel Estimation
D.2.1 Baseline Estimation
D.2.2 Heterogeneity
D.2.3 Robustness
D.2.4 Income Taxes
D.2.5 Expenditure Taxes
D.2.6 Cross-Country Estimation
D.3 Conclusion
