Countries all over the world experienced exceptional inflation rates since 2021 as a consequence of global supply chain disruptions, a post-Covid-19 demand shock, and rising energy costs after the Russian Federation’s invasion in Ukraine. Germany is one particularly relevant example, given that the European Union’s strongest economy has high anti-inflation sentiments and employs relatively tight fiscal policy but nevertheless suffered the longest from those shocks. This study examines price developments – broken down by various sectors – in Germany and how the additional revenues from these price increases were distributed between capital and labor. Results suggest that the high levels of inflation in 2021-2023 in Germany cannot be explained by the substantial rises in energy prices alone. The analysis of deflators for gross value added indicates that the price increases were heterogeneous across economic sectors with particularly high levels in agriculture, construction, energy supply, as well as services in trade, transport, and hospitality. Profits accounted for 57.6% of nominal gross value added in the most inflation-intensive sectors. This is 32% above the average of the other sectors, indicating that most of the inflation was associated with company profits in the high inflation sectors. The inflation consequently benefited capital owners at the expense of workers who suffered from increased prices without receiving sufficient compensation through higher wages. In terms of policy implications, there is no evidence of a wage-price spiral, but clear evidence that the key contributors of inflation were increased energy prices and corporate profits.
While public debate and prominent studies expect digitalization to substantially reduce energy use and carbon dioxide () emissions, quantitative research has produced ambiguous results. This study addresses the challenges in the analysis of the relationship between a country’s digitalization level and emissions by employing the Group Fixed Effects estimator for panel data of EU and OECD countries and by differentiating between emissions associated with digitalization in firms and households.
Results are highly robust to the statistical procedure and indicate that digitalization in both households and firms generally decreases emissions. At the sample median, a 10% increase in firm (household) level digitalization would, on average, decrease emissions by 0.3% (0.8%). In countries of the three lowest deciles in the income distribution, however, the effect is reversed: Here, an increase in digitalization is also associated with an increase in emissions.
The results are further interpreted beyond the median effect and differentiate between countries of different incomes through a non-parametric approach. This analysis also has implications for the discussion of the Environmental Kuznets Curve (EKC) hypothesis, as the empirical analysis nests an estimation of an EKC model, extended by a measure of digitalization.
Deterioration of the natural environment and economic inequality are profound concerns in many societies. To avoid adverse environmental side effects when implementing policies to reduce inequality, an understanding of potential conflicts of objectives is required.
Different theoretical considerations suggest reducing effects of inequality on environmental impact, but also increasing ones. This paper provides empirical evidence on the environmental impact of inequality through a panel data set of 116 countries over 55 years. The multidimensionality of environmental impact is accounted for by relying on the six subindices of the Ecological Footprint.
Results are discussed based on an innovative, graphical approach that allows for the assessment of effects of inequality on environmental impact based on a country's initial location within the entire observed inequality and income range. They suggest that reducing inequality levels increases carbon footprints. For surface sealing and the use of forest land, a conflict of objectives exists only in relatively rich and egalitarian countries, while there is room for jointly reducing environmental impacts and inequality in relatively poor and initially unequal countries. All results are highly robust to the estimation procedure.
We conclude that, especially in richer countries, policy measures to reduce inequality need to be accompanied by policies that limit harmful environmental impacts of income redistribution in order to reduce inequality and environmental impact jointly.
La presente investigación tiene por objeto estudiar los principales determinantes económicos, demográficos y políticos del gasto social en América Latina entre 1990 y 2010, a partir de un modelo autorregresivo de corrección de errores, utilizando estimadores MGM de sistema. Los resultados muestran que el nivel de gasto social, tanto agregado como en sus tres componentes (educación, salud y seguridad social), tienen una relación de largo plazo con la renta per cápita, la apertura comercial y de capitales, la tasa de matriculación primaria y secundaria, los ingresos tributarios indirectos y los regímenes democráticos. A corto plazo, el gasto social está afectado por el crecimiento de la inversión extranjera directa recibida, la estructura de la población, los ingresos tributarios directos, gastos corrientes y de capital y el déficit público. Asimismo se constata un proceso de convergencia beta de los países hacia diferentes estados estacionarios. We study the main economic, demographic and political determinants of social spending in Latin America between 1990 and 2010, applying an autoregressive error correction model with GMM system estimators. Results show that the level of social expenditure and its three categories (education, health and social security) have a long-term relationship with per capita income, trade and capital openness, the primary and secondary enrollment ratio, indirect tax revenues and democracy regimes. In the short-term, social spending is affected by the growth of foreign direct investment inflows, population structure, direct tax revenue, current and capital expenditures and fiscal deficits. We also find a process of beta convergence of countries to different steady states .
Las compras públicas representan alrededor del 30% del gasto público total y acerca del 12% del PIB del Ecuador. Sin embargo, existe poca evidencia empírica sobre esta potencial palanca para alcanzar objetivos de desarrollo, como crecimiento, industrialización e innovación. En el presente artículo se analiza el nuevo marco legal para compras públicas, establecido en el 2008, con el objetivo de determinar (i) si el nuevo sistema de compras públicas cumple con los objetivos establecidos en la ley que otorga preferencias para MIPYMES y para empresas con cierto nivel de componente nacional, y (ii) si el nuevo sistema de compras públicas ha tenido efectos positivos en la desconcentración del mercado y en la participación del componente nacional. Se concluye que la incidencia en la desconcentración y el componente nacional de las compras públicas en toda la economía es limitada. A pesar de que se cumplen formalmente las preferencias para MIPYMES, y considerando la progresividad en los montos adjudicados, no se ha observado una desconcentración del mercado significativa gracias a las compras públicas. Para el componente nacional, los índices han aumentado tanto en la economía en general como en las compras públicas, pero debido a que no se cumple formalmente con las preferencias para el componente nacional este aumento no se puede atribuir exclusivamente a las compras públicas.
Amplified challenges for the joint reduction of emissions and inequality, considering the missing-rich. with Kopp, T. and Nabernegg, S., R&R Journal of Environmental Economics and Mangement.
Existing studies on the relationship between income inequality and carbon emissions often identify a trade-off, with reductions in inequality leading to increased emissions. Such empirical analyses typically rely on household surveys that underrepresent high-income households or apply constant income-emission elasticities to datasets that adjust for missing top incomes. This study introduces an integrated bottom-up approach that combines corrected income distributions using tax register microdata with machine-learning-based consumption predictions to better capture the income-emission relationship across the full income range. We compare this approach to the traditional approaches to derive income and emission distributions. Based on these results, we produce Environmental Engel Curves, income-emission elasticities, and emission intensities, along with four income redistribution scenarios. This is applied to Ecuador, a country notable for its high income inequality and institutional commitment to environmental protection. The new, integrated approach reveals significantly higher emissions for top-income earners. It also captures an hshaped pattern of emissions intensity per US$ income over the income distribution—initial decline, plateau, and subsequent decline—which is missed by the traditional approaches. Consequently, estimated emissions under full redistribution increase by 26% when using the integrated bottom-up approach, compared to 6% in the uncorrected survey approach. These findings highlight the importance of improved data and methods in assessing the inequalityemission trade-off. They also underscore the importance of targeted redistribution rather than adopting a scattergun approach and complementing climate-oriented public provisioning to avoid unintended environmental costs of distributional policies.
The Effects of Digital Yield Monitoring on Greenhouse Gas Emissions and Production Intensity in US Crop Production. with Kopp, T., Finger, R., Huber, R. and Sexton, R. 2025
The motivation for adopting digital technologies in agricultural production primarily lies in enhancing farm productivity and realizing private economic benefits, for example through reduced input use, such as fertilizer. A potential secondary, public benefit is the reduction of externalities associated with input use, resulting, for example, in fewer greenhouse gas emissions from fertilizer application. In addition, the cost savings can cause the expansion of production in regions that apply such smart agricultural practices, reducing production and emissions in other parts of the world with lower productivity. This study produces first insights on the macroeconomic effects of digitalization on greenhouse gas emissions per unit of output and on output quantities within the United States agricultural sector.
Extreme Income Inequality in Ecuador 2007 to 2021 – Dollarization, Commodity Price Boom, and Citizen Revolution. 2024
The literature on inequality and top-income concentration in developing countries lacks studies covering longer time frames. This study introduces Ecuador’s first comprehensive Distributional National Account (DINA) series, covering the period from 1990 to 2022, and provides detailed pretax and posttax income indicators. An innovative integration method that merges extensive household and tax microdata allows for a nuanced analysis of income inequality across three decades characterized by economic booms and crises. The results indicate that Ecuador’s extreme income concentration at the top persists into the present. In 2022, the top 1% captured 25% of pretax income, and Ecuador stands out among Latin American countries for having the highest income share held by the top 0.1%. Although not designed for causal inference, this study offers insights into the political economy of inequality in a primary goods exporting country during exogenous economic shocks. Economic institutions in Ecuador have probably passed from an extractive equilibrium before the banking crisis and subsequent dollarization in 2000 to a weak inclusive equilibrium during the commodity price boom until 2014. This inclusive equilibrium has been endangered in recent years, as economic power concentration could not be further reduced and the redistributional capacity built up during the commodity price boom has been undermined after the COVID-pandemic.
The Effects of Inequality on the Triple Burden of Malnutrition – Are there Synergies or Trade-offs?. with Kopp, T. 2024
This study explores the potential trade-offs between reducing economic inequality and improving nutritional quality, focusing on children under five. Using a Group Fixed Effects model on panel data from 169 countries over 21 years, it finds that reducing inequality generally decreases under nutrition and micronutrient deficiencies. However, the effects on overweight vary, increasing in low-income countries but decreasing in high-income ones. The latter findings highlight the need for inequality-reduction policies to consider potential adverse effects on overnutrition. The results, illustrated through three-dimensional surface plots, emphasise the interplay between income inequality, average income, and nutritional outcomes, and are robust across estimation methods.