*Capitalist Systems and Income Inequality*, new WP with @BrankoMilan is out!

Does classical capitalism, where rich individuals earn only from ownership (capital) and poor only from work (labor), display higher income inequality than liberal capitalism?

Thread below! (1/6)
Recall that:

Classical capitalism <—> high income composition inequality (ICI)

Liberal capitalism <—> low income composition inequality

To measure the level of a country's ICI, we use the IFC index that I developed in this paper —> osf.io/preprints/soca…

Using @lisdata from 47 countries we report three main empirical messages & one methodological innovation:

First empirical finding:

At the quasi-global scale, classical capitalism is associated with higher income inequality than liberal capitalism.

Second empirical finding:

3 major clusters emerge: LACs (green) combine high inequality & high ICI; advanced economies (blue) show moderate levels of both inequality dimensions; Nordic countries (red) are exceptional insofar as they combine low inequality & high ICI.

Third empirical finding:

No one country in our sample combines high inequality and low ICI. This provides an argument for better redistributing individuals' factor shares (i.e. capital and labor) across the income distribution.

Methodological innovation:

We introduce a novel formal expression for the Gini coefficient, which can be interpreted as a Cobb-Douglas inequality function. Below its functional form:


• • •

Missing some Tweet in this thread? You can try to force a refresh

Keep Current with Marco Ranaldi

Marco Ranaldi Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!


Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!

Follow Us on Twitter!