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Economic Change and Restructuring
Published in: Economic Change and Restructuring 6/2023

14-08-2023

Population aging and wealth inequality

Author: Joyce Hsieh

Published in: Economic Change and Restructuring | Issue 6/2023

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Abstract

Much effort has been devoted to exploring the consequence of population aging on economic growth. Little attention is paid to its impact on income and wealth inequality. This is critical because inequality matters for the distribution of economic resources and social welfare and is interlinked to economic growth. To fill the void, this paper evaluates whether population aging affects inequality, with special emphasis on wealth inequality and nonlinearity. In a cross-country panel data setting, it finds that top wealth shares follow a U path, i.e., decrease and then increase, in the process of population aging. By contrast, the bottom wealth shares have an inverted-U pattern, i.e., rise and then fall, when a population ages. Similar results are reached for the income share. The data thus suggest that there exists some threshold level of population aging such that any deviations from that level will widen the gap between the wealthy and the poor and increase disparities in wealth and income inequality.
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Appendix
Available only for authorised users
Footnotes
1
Our dataset is available upon request. As for the STATA codes for GMM and GMM quantile estimation procedures as well as panel VAR causality tests, please type “help xtabond2”, “help qregpd”, and “help pvar” in STATA.
 
2
Political stability measures the likelihood of political instability and/or politically motivated violence, including terrorism. Control of corruption measures the extent to which public power is exercised for private gain, including both petty and grand forms of corruption, as well as capture of the state by elites and private interests.
 
3
The marginal effects and standard errors are calculated through the delta method, based on the sample mean of variables in the regression.
 
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Metadata
Title
Population aging and wealth inequality
Author
Joyce Hsieh
Publication date
14-08-2023
Publisher
Springer US
Published in
Economic Change and Restructuring / Issue 6/2023
Print ISSN: 1573-9414
Electronic ISSN: 1574-0277
DOI
https://doi.org/10.1007/s10644-023-09551-3

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