DTA

Dottorato

PALAGI, ELISA

etd-10282021-093207

The complexity and multidimensionality of economic inequality: four essays

SECS-P/01

Istituto di Economia - JOINT PHD IN ECONOMICS

relatore Prof. ROVENTINI, ANDREA

• economic inequality
• agent-based models
• fiscal policy
• climate change
• intellectual property rights

03/02/2022;

parziale

Economic inequality is shaped by a variety of factors and might, in turn, have important heterogeneous impacts on our socioeconomic system. This thesis aims at studying some key determinants and consequences of economic inequality. After an introduction in Chapter 1, Chapter 2 presents an agent-based model which shows how unequal access to opportunities generates income inequality, with the latter being detrimental for growth. The model features a trickle-up growth mechanism, with redistributive fiscal policy being beneficial also for upper parts of the income distribution and for aggregate dynamics. Chapter 3 investigates a possible determinant of income inequality which is, to date, rarely studied in the economic literature. Through the use of climate-econometrics techniques, the chapter shows that precipitation anomalies may have significant adverse impacts on national income distributions in countries whose economies primarily rely on agriculture. Given climate models projections, the chapter shows that ultimately climate anomalies increase global income inequality. Chapter 4 provides evidence for the heterogeneity of the difference between rates of return on wealth and growth rates of income (r-g) by using Norwegian administrative microdata. Taking into account heterogeneity in r-g appears to be crucial for understanding wealth inequality dynamics. Chapter 5 introduces a different dimension of inequality, given by rents and returns from intellectual property, through an evolutionary model of patents and innovation in the pharmaceutical sector. We find that strong patent regimes have adverse impacts on consumer welfare and innovation, and increase concentration. Finally, Chapter 6 draws some conclusions.
By combining theoretical and empirical analysis on fundamental (inequality in opportunities, rates of return on wealth), institutional (IPR regimes) and environmental (climate change) factors, this thesis shows that inequality is a complex and multidimensional phenomenon. Accordingly, policy responses require adopting an ensemble of measures. First, redistributive fiscal policy and progressive taxation of both income and wealth (Chapters 2 and 4 respectively) limit excessive inequality and generate more favourable macroeconomic conditions. Second, there is a growing need for mitigation strategies, especially in developing countries that are heavily depending on agriculture, in order to make low-income households less exposed to possible adverse impacts due to climate change (Chapter 3). Third, reducing rent-appropriation mechanisms, by designing light patent protection systems, would increase innovation and consumer welfare (Chapter 5), limiting concentration. Finally, curbing economic inequality would improve resilience of economic systems to major societal challenges.

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