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The Effect of Capital Ownership and Ownership Spread on Economic Income Distribution

Author

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  • Esat Dasdemir

    (The Effect of Capital Ownership and Ownership Spread on Economic Income Distribution)

  • Halil Tunali

    (Istanbul University, Faculty of Economics, Department of Economics, Istanbul, Turkiye)

Abstract

This study makes a comparative analysis on the spread of ownership and capital ownership by associating it with income distribution. The spread of property and capital ownership to the base diversifies the type of income individuals receive from the functional income distribution. When these two elements spread to the base, inequality in the functional income distribution will affect the interpersonal income distribution less, and diversity TThis study makes a comparative analysis on the spread of ownership and capital ownership by associating it with income distribution. The spread of property and capital ownership to the base diversifies the type of income individuals receive from the functional income distribution. When these two elements spread to the base, inequality in the functional income distribution will affect the interpersonal income distribution less, and diversity in individuals’ income will contribute to social peace. The study emphasizes within its scope the distinction between income distribution and wealth distribution and numerically explains the relationship income distribution as a flow variable has with wealth distribution as a stock variable. In order to test the study’s theoretical discourse, it conducts a panel data analysis using the annual frequency data from 15 countries covering the 2003-2018 period. The analysis uses the ratio of market value to revenue from publicly offered shares traded in countries’ stock exchanges to represent the spread of ownership and capital to the base. According to the obtained results, an increase in the ratio of publicly traded stocks improves income distribution; in other words, the GINI coefficient decreases. This result was determined to be more intense in the Turkish economy with the dummy variables that were used. An increase in the consumption rate, which was used as a control variable in the model, results in income distribution deteriorating. The study will fill an important gap in the literature with its conclusions, determinations, and policy recommendations.

Suggested Citation

  • Esat Dasdemir & Halil Tunali, 2023. "The Effect of Capital Ownership and Ownership Spread on Economic Income Distribution," Istanbul Journal of Economics-Istanbul Iktisat Dergisi, Istanbul University, Faculty of Economics, vol. 73(73-1), pages 533-554, June.
    • Handle: RePEc:ist:journl:v:73:y:2023:i:1:p:533-554
    DOI: 10.26650/ISTJECON2022-1058516
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    References listed on IDEAS

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    1. Andreas Fagereng & Luigi Guiso & Davide Malacrino & Luigi Pistaferri, 2016. "Heterogeneity in Returns to Wealth and the Measurement of Wealth Inequality," American Economic Review, American Economic Association, vol. 106(5), pages 651-655, May.
    2. Yonatan Berman & Eshel Ben-Jacob & Yoash Shapira, 2016. "The Dynamics of Wealth Inequality and the Effect of Income Distribution," PLOS ONE, Public Library of Science, vol. 11(4), pages 1-19, April.
    3. Baltagi, Badi H. & Wu, Ping X., 1999. "Unequally Spaced Panel Data Regressions With Ar(1) Disturbances," Econometric Theory, Cambridge University Press, vol. 15(6), pages 814-823, December.
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    More about this item

    Keywords

    Income inequality; Wealth inequality; Distribution JEL Classification : D30 ; E20 ; G32 ; G51;
    All these keywords.

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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