1. Introduction to Inequality-IMF
“Introduction to Inequality.” IMF. www.imf.org/en/Topics/Inequality/introduction-to-inequality.
This article from provides information about several different aspects of economic inequality including: a introduction to the concept of economic inequality, differnt ways it is measured, potential causes of inequality, and lastly the various implications and consequcnes of economic inequality on economic growth and stability. The article in specifc emphasized income and wealth inequality and how they are correlated, it also highlights the factors contributing to these differences, such as educational access, access to financial markets, and disparate economic policies.
In addition, the IMF talks about several indicators used to measure inequality most notably, the Gini coefficient which measures economic inequality on a scale from 0-1, and explains their significance in evaluating the distribution of economic resources within a society. The article also explores the many potential consequences of the rising levels of inequality, such as reduced social cohesion, a decrease in economic growth, decrease in stability and much more.
This source is a good broad introduction on the concept of economic inequality and provides a basis for analyzing how stock market trends may interact with these disparities. The article's overview of the most common inequality indicators and their implications also provides much needed insight on an important aspect for the backbone of our project. makes. The insights and information from the article will help us in our data analysis and provide support for our project on the broader economic and social impacts of stock market performance on overall inequality.
2. Increasing Capital Income Share and Its Effect on Income Inequality
Milanovic, B. (2017). Increasing capital income share and its effect on personal income inequality. Stone Center on Socio-Economic Inequality. Retrieved from https://stonecenter.gc.cuny.edu/files/2017/05/milanovic-increasing-capital-income-share-and-its-effect-on-personal-income-inequality-2017.pdf
This paper written by economist Branko Milanovic explains the historical increase of capital income share and the implications it has on income and overall inequality. The article first introduces key information and terminlogy such as capital income, investment, gini coefficent etc, which are all essential in undertanding economic inequality. The paper proceeds to analyze the trend of rising capital income share, as opposed to labor income share and explains potential causes ranging from policy changes, globilization and more. Furthermore Milanovic in the article illustrates how this trend of an increase in capital share of income has been exacerbatring economic inequality, since most capital is concentrated within the wealthy. In addition he supports this claim with emperical evidence and visuals.
After analyzing the trend of an increase of capital income share, and the implications it has on overall economic inequality, the paper discusses potential solutions to the limit the harmful impact. These solutions included wealth taxes, increased progressive taxation, efforts to increase capital income within different income groups etc. This paper overall provides a basis for our project and helped specifically in regards toundertanding the historical context of capital income share vs labor income share, as well as the modern day implications of economic inequality and the potential future solutions.
3. Taking Stock: Income Inequality and the Stock Market-Fed
Owyang, Michael T, and Hannah G Shell. “Taking Stock: Income Inequality and the Stock Market.” Economic Research - Federal Reserve Bank of St. Louis, doi.org/10.20955/es.2016.7.
This article from the St. Louis Federal Reserve examines the relationship between income inequality and stock market performance. It provides evidence of a positive correlation between the Gini coefficient and stock prices, indicating that stock market gains primarily benefit the wealthy. The wealthy make up the composition of stock owners by a great extent. The paper discusses how lower- and middle-income families, who are less likely to invest in equities, miss out on these gains, thereby widening the economic gap. The Gini coefficient began to rise after the 1970s, and alongside the rise of the Gini coefficient, inequality rose too. This article provides data that shows the disproportionate growth in the market for the top 1% as opposed to the other percentiles. Although a positive performance in the stock market benefits the wealthy more, they are also the group that is negatively affected by a downturn in the stock market’s performance. Even with the potential for great loss, the article discusses the ability for a quick financial recovery for the top 1 percent.
This source is crucial for understanding the dynamics of stock market participation and its impact on economic inequality, offering valuable insights for the empirical analysis in the project. It also highlights the gravity of the repercussions for those who participate in the stock market; even though all who participate may see negative or positive outcomes, the extent of this differs depending on the percentile in which the participant pertains therefore applying nuance to our findings.
4. ESG and Stock Market Trends
Whelan, Tensie et al. “ESG AND FINANCIAL PERFORMANCE: Uncovering the Relationship by Aggregating Evidence from 1,000 Plus Studies Published between 2015– 2020.” 2021.https://www.stern.nyu.edu/sites/default/files/assets/documents/NYU- RAM_ESG-Paper_2021%20Rev_0.pdf.
This paper explores the impact of Environmental, Social, and Governance (ESG) factors on stock market performance. It argues that companies with strong ESG practices tend to perform better in the long run because there is a high correlation between ESG practices and positive financial performance. In addition to finding a large percentage of positive or neutral financial performance, a very small percentage of studies discovered a negative relationship. The analysis includes data on the financial performance of ESG-focused companies compared to those without ESG considerations. This paper found that ESG investing prevents huge impacts or encourages quicker recovery after social-economic crises. It especially notes the 2008 recession and COVID-19 as economic crises. ESG stock market indices and the index funds performed better than the “conventional” counterparts demonstrating that ESG investing benefits stockholders as well.
This paper is relevant because ESG practices can help address economic disparities by promoting sustainable and inclusive growth for both employees and outside involved parties. By noticing positive performance from companies that follow ESG practices, it is encouraging for others to follow suit. If more companies follow ESG principles, this can help lessen the income-inequality gap that has been rising for many years. This source is valuable for integrating modern perspectives on how market trends and social factors intersect, supporting the project's examination of the broader implications of stock market dynamics on economic inequality.
5. Trends in Income Inequality and Economic Growth
Cingano, F. “Trends in Income Inequality and its Impact on Economic Growth”. OECD Social, Employment and Migration Working Papers, No. 163, OECD Publishing. 2014. http://dx.doi.org/10.1787/5jxrjncwxv6j-en
In this working paper, Federico Cingano investigates the long-term trends in income inequality across OECD countries and examines its impact on economic growth. Utilizing harmonized data spanning over 30 years, the paper conducts an econometric analysis that shows a negative and statistically significant relationship between income inequality and subsequent economic growth. The study finds that the widening the gap between low-income households and the rest of the population is detrimental to growth. It explores the human capital accumulation theory, showing that increased income disparities hinder skill development among individuals from poorer backgrounds, affecting both the quantity and quality of education attained.
Key findings include that income inequality has been on the rise in most OECD countries over the past 30 year,s and that greater inequality negatively impacts economic growth, mainly through reduced opportunities for low-income households. Redistribution policies like taxes and transfers are not undermining growth and are essential for ensuring that the benefits of growth are more broadly distributed. The paper emphasizes the importance of promoting equality of opportunity, especially in education, to sustain long-term growth.
The insights provided in this paper are important for understanding the broader economic implications of income inequality. For our project on economic inequality and stock market trends, this source offers valuable evidence and theoretical context. It highlights the importance of considering both fiscal policies and market dynamics when analyzing the relationship between financial markets and economic inequality. The findings show the need for policies that address income disparities to foster sustainable economic growth.
6. Stock Market Capitalisation and Financial Growth Nexus
Alshubiri, F. The stock market capitalisation and financial growth nexus: an empirical study of western European countries. Futur Bus J 7, 46. 2021. https://doi.org/10.1186/s43093-021-00092-7
This study explores the relationship between stock market capitalization and economic growth in Western European countries, spanning the time period from 1989 (around the end of the Soviet Union) through 2018 and using quantile regression as a correlation measurement system. The authors find that well-developed financial markets (namely, those with a high amount of international capitalistic trade and a low amount of inflation and GDP per capita growth) contribute significantly to economic growth, but the benefits are often unevenly distributed, leading to increased inequality. The paper emphasizes the importance of inclusive financial development to ensure that economic growth benefits a broader segment of the population. This source is critical for understanding regional variations in financial market impacts and the importance of policies that promote inclusive growth, thereby supporting the project's focus on the intersection of stock market trends and economic inequality.
The authors also derive the conclusion that regulatory and systematic obstacles standing in the way of maximizing international trade ought to be avoided, and that the rights of shareholders should be protected. Notably, they do not account for what groups of people typically invest in the stock market, which the Marxist lens dictates are well-off financially and thus part of the bourgeoisie.
7. The Nexus Between Stock Market and Economic Activity: An Empirical Analysis for India
Chandra Padhan, P. "The nexus between stock market and economic activity: an empirical analysis for India". International Journal of Social Economics, Vol. 34 No. 10, pp. 741-753. 2007. https://doi.org/10.1108/03068290710816874
This paper examines the bi-directional causality between stock market performance and economic activity in India, using an advanced econometric model called the TYDL model (a more specific form of Granger causality testing, named after its authors). The study finds that a well-developed stock market enhances economic activity, and vice versa, particularly in the post-liberalization period. The paper highlights the specific economic dynamics of a developing country, providing insights into how stock markets interact with broader economic conditions. This source is useful for understanding the complex interplay between market performance and economic development in emerging economies, supporting the project's comparative analysis of different regions.
It should be noted that, while India's stock market in particular doesn't seem to play an especially large role in the country's current international economic standing (and the study doesn't account for the agricultural sector of India's economy, its largest sector), India's role as a major developing world power makes it a good general stand-in for smaller country economies than that of the United States, potentially further broadening the scope of the argument to a worldwide scale. The authors also briefly mention that these findings have possible applications for those involved in making and reforming fiscal policy.
8. The Richest 1 Percent Own a Greater Share of the Stock Market Than Ever Before
Collins, Chuck. “The Richest 1 Percent Own a Greater Share of the Stock Market Than Ever Before.” Institute for Policy Studies, 17 Jan. 2024. ips-dc.org/the-richest-1-percent-own-a-greater-share-of-the-stock-market-than-ever-before/.
This article from the Institute for Policy Studies, written by Chuck Collins, founder of the Wealth for Common Good project, highlights the growing concentration of stock market wealth among the richest 1% of Americans. It provides data showing that the wealthiest individuals now own a larger share of the stock market than at any other time in recent history. The article discusses the implications of this trend for economic inequality, noting that such concentration of wealth increases disparities in economic power and opportunity. This source is crucial for understanding the dynamics of wealth distribution in the stock market and supports the project's analysis of how stock market gains disproportionately benefit the wealthy, increasing economic inequality. Additionally, the time of publication on this article provides value for the purpose of our project. The source was published on June 17, 2024. This means that Collins was able to incorporate the impacts of the COVID-19 shutdowns into his analysis of how stockholder demographics are representative of wealth disparities in the United States. Additionally, the article helps us analyze the article through the Marxist critical lens as it shows that the capitalist system allows for the elite to accumulate huge amounts of capital and control the means of production.
9. Financial Inclusion, Human Capital, and Inequality: Evidence from the United States
Dudley, Thomas, and Ethan Rouen. "Employee Ownership and Wealth Inequality: A Path to Reducing Wealth Concentration." Harvard Business School Working Paper, No. 22-021, September 2021.https://www.hbs.edu/ris/Publication%20Files/22- 021update_2436e39f-f7ff-4883-90a3-a17cc75b1bc1.pdf
In this working paper, Thomas Dudley and Ethan Rouen explore the potential impact of a significant increase in employee ownership on wealth inequality in the United States. Utilizing data from the Survey of Consumer Finances and applying a model where all private firms become 30% employee-owned, the authors show that such a shift could profoundly alter wealth distribution. Their empirical analysis shows that broad-based employee ownership would lead to substantial wealth gains for the bottom 90% of the wealth distribution, particularly benefiting traditionally marginalized communities. Conversely, the top 1% of wealth holders would experience a modest average decline in their wealth by 14%, and this would still leave them with significant wealth.
The authors argue that employee-owned firms tend to be more productive, grow faster, and are less likely to go out of business, suggesting that this model not only reduces wealth inequality but also improves overall economic performance. The Gini coefficient, a measure of income inequality, would decrease significantly to a level not seen since 1962. Additionally, the wealth share of those with below-median wealth would increase from 1% to 6% of total wealth.
This paper is relevant to our project on economic inequality and stock market trends as it provides evidence that structural changes in business ownership can lead to more equitable wealth distribution. It supports our findings by showing how policy interventions, such as encouraging employee ownership, can mitigate economic disparities. The paper’s insights into the benefits and practical considerations of employee ownership offer a valuable perspective for our analysis, highlighting a potential pathway to reducing wealth concentration and promoting inclusive economic growth.
10. Economic Equity: Inequality and Stock Market Participation
Balaban, RC, and YiLi Chien. “Economic Equity: Inequality and Stock Market Participation.” Federal Reserve Bank of St. Louis, 4 Nov. 2020. https://www.stlouisfed.org/timely-topics/economic-equity-inequality-and-stock-market-participation
This article is a transcription of an RC Balaban’s, Senior Editor of Publications for Federal Reserve Bank of Richmond, interview of Yili Chien, Research Officer at Federal Reserve Bank of St. Louis. The article explores the factors influencing stock market participation rates and their impact on economic inequality. It discusses how income and education levels affect an individual's likelihood of investing in the stock market. The findings indicate that higher-income and more educated individuals are more likely to invest in stocks, leading to greater wealth accumulation for these groups and increasing economic inequality. This source is valuable for understanding the barriers to stock market participation and how these barriers contribute to economic disparities, supporting the project's examination of the relationship between stock market trends and economic inequality. Our project is about the impacts of the pandemic shutdowns and this article, like many of the others that we used for this project, has the benefit of being published after the COVID-19 shutdowns. However, this one was published just a few months after the shutdowns began. It is for this reason that this source has the limitation of not fully being able to analyze. This article provides a helpful foundation for analyzing how stock market participation is indicative of wealth gaps in the United States.
11. Financial Inclusion and Inclusive Growth: A Review of Recent Empirical Evidence
Demirguc-Kunt, et al. Financial inclusion and inclusive growth : a review of recent empirical evidence (English). Policy Research working paper, no. WPS 8040 Washington, D.C. . World Bank Group. http://documents.worldbank.org/curated/en/403611493134249446/Financial-inclusion-and-inclusive-growth-a-review-of-recent-empirical-evidence
This World Bank paper provides an extensive review of recent empirical evidence on the impact of financial inclusion on inclusive growth and economic development. The authors, Demirguc-Kunt, Klapper, and Singer, examine how the use of various financial products—such as payment services, savings accounts, loans, and insurance—contributes to economic development, particularly for women and poor adults. The paper highlights the significant benefits of financial inclusion, including improved efficiency in financial transactions, better risk management, and investment opportunities, which collectively support poverty reduction and economic growth.
The study also identifies challenges to achieving greater financial inclusion, such as the lack of access to formal financial services, regulatory barriers, and limited financial literacy. The paper’s insights into the barriers to financial inclusion and potential policy interventions are crucial for understanding how to enhance financial inclusion to reduce economic disparities.
This source will be particularly useful in the narrative section of our project, providing a theoretical framework and empirical evidence to support our analysis of the relationship between stock market trends and income inequality. It also offers valuable context for our data critique, highlighting the importance of financial inclusion in promoting inclusive economic growth and the availability of data to understand the relationship between financial inclusion and income inequality.
Yaya, M.E. Great Recession and Income Inequality: a State-level Analysis. J Econ Race Policy 1, 112–125. 2018. https://doi.org/10.1007/s41996-018-0016-6
This paper investigates the difference in income inequality amongst and within racial and ethnic groups as a result of the Great Recession. The topic of change in income inequality and the Great Recession have been heavily researched, but the paper notes that there is a lack of focus on income inequality based on ethnic and racial groups in the USA. Results show that there is indeed a difference in magnitude regarding the rise of income inequality and unemployment rates amongst asian, hispanic, black, and white people. Because of these results, more inequality in the USA is highly probable.
The findings of this research show that the level and rise of income inequality as an effect of the Great Recession are not uniform amongst the noted racial and ethnic groups. The methodology is very straight forward with the use of state-level data. This can help our project by providing an important intersectional perspective on an economic topic. The Great Recession hurt everyone in the United States, but it is important to note that it was not to the same degree on all groups of people. The paper helps support this by providing data, such as Gini coefficients, to understand identities and their role in income inequality.
DeSilver, Drew. “A Booming U.S. Stock Market Doesn’t Benefit All Racial and Ethnic Groups Equally.” Pew Research Center, 6 Mar. 2024. https://pewrsr.ch/434wwpI
In this article, DeSilver analyzes the benefits of a booming stock market and its effect on racial and ethnic groups. He provides data that shows the difference in stock ownership by families and individuals based on race. These differences are a pattern that has been observed in the history of the stock market. There is a great disparity between ownership and stock value for both families and individuals grouped by race and ethnicity. Although data and statistics show disparity between racial and ethnic groups, DeSilver also discusses the rise in ownership due to higher levels of exposure to the stock market that can help lessen the stark differences.
The research done in this article sources from federal data, and it does not appear to be written with a biased voice as it heavily relies on data to show disparities in ownership. From there the linkage between what groups benefit is made solely based on the data. The author is a senior writer from the Pew Research Center which prides themselves on being nonpartisan researchers about worldwide trends. Overall, this paper provides factual information about the racial and ethnic makeup of stock market owners. It will provide more understanding on inequality when it comes to stock market trends.
14. Stagflation in the 1970's
Nielsen, Barry. “Stagflation, 1970s Style.” Investopedia, 18 July 2021, www.investopedia.com/articles/economics/08/1970-stagflation.asp.
Using this as a source was completely conflicting for the group. On one hand, investopedia isn’t a brand that claims accuracy nor integrity. On the other hand, none of the sources that our group looked at were able to cover the reason why the gap in poverty originated. Most other sources just claimed that in the 1970’s the gap between earners widened and never returned to normal. This source ended up becoming absolutely fundamental to our project because of the amount of depth within it. Learning more about the economic impacts of the Vietnam war, the arab oil embargo, and etc, were able to illuminate a transparent perspective on what caused the class gap to widen. It also covers a term that we didn’t know about, stagflation, where prices are going up but the economy isn’t growing. While you would think that something like this would be easily thought about and accounted for with economists in the 1970’s, we found out it was something that completely changed how economists think about the economy because it was an ironclad assumption that if prices go up, then wages would as well.Overall, the level on insight and content covered in this article is second to none.
15. The Effects of Economic Growth on Income Inequality in the US.
United States Census Bureau. “National Poverty in America Awareness Month: January 2024.” Census.gov, United States Census Bureau, Jan. 2024, www.census.gov/newsroom/stories/poverty-awareness-month.html.
This source is from the United States Census Bureau. I really like this source because it has a lot of information on relevant topics to our project, like poverty rates in the U.S. over long periods of time. The funniest thing about this article is that it was released for poverty awareness month but there’s no actual text in the article itself. It’s not trying to make an argument but rather it just is a combination of helpful links to help understand the issue of poverty in the US. One thing that is slightly awkward about this article is that it was released in January of 2024, but the focus of the article is the poverty rate in 2022. This could just mean that this article was edited and reposted in January or it could mean that it takes close to 2 years to be able to actually filter and clean data so that it’s accurate. This source also reaffirms the claim that the wealth gap started in the 1970’s and since then it’s never been able to come down to levels before 1970’s. This is important because it means that since 1970 the amount of people in poverty has been steadily increasing.