IDEAS home Printed from https://ideas.repec.org/a/eee/ecanpo/v84y2024icp628-645.html
   My bibliography  Save this article

Income inequality and complexity of the productive structure: New evidence at the world level

Author

Listed:
  • Amarante, Verónica
  • Lanzilotta, Bibiana
  • Torres-Pérez, Joaquín

Abstract

This paper investigates if the complexity of a country's productive structure can help explain variations in income inequality. We use country panel data on 126 countries from 1995 to 2018 and approximate a country's productive structure through the Economic Complexity Index and income inequality from the World Income Inequality Database. Our results found that the relationship between economic complexity and income inequality is not homogenous across countries and, that at the world level, is not linear. Instead, when the level of complexity of the economy is low, increases in complexity mainly lead to an increase in economic inequality. At higher levels of economic complexity, its effect on income inequality becomes negative. This means that economic complexity improves equality after certain thresholds, which seems to reflect the situation of high-income economies.

Suggested Citation

  • Amarante, Verónica & Lanzilotta, Bibiana & Torres-Pérez, Joaquín, 2024. "Income inequality and complexity of the productive structure: New evidence at the world level," Economic Analysis and Policy, Elsevier, vol. 84(C), pages 628-645.
  • Handle: RePEc:eee:ecanpo:v:84:y:2024:i:c:p:628-645
    DOI: 10.1016/j.eap.2024.09.014
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0313592624002364
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.eap.2024.09.014?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. L. Rachel Ngai & Barbara Petrongolo, 2017. "Gender Gaps and the Rise of the Service Economy," American Economic Journal: Macroeconomics, American Economic Association, vol. 9(4), pages 1-44, October.
    2. Bruno Martorano & Marco Sanfilippo, 2015. "Structural Change and Wage Inequality in the Manufacturing Sector: Long Run Evidence from East Asia," Oxford Development Studies, Taylor & Francis Journals, vol. 43(2), pages 212-231, June.
    3. Chu, Lan Khanh & Hoang, Dung Phuong, 2020. "How does economic complexity influence income inequality? New evidence from international data," Economic Analysis and Policy, Elsevier, vol. 68(C), pages 44-57.
    4. Francisco J Buera & Joseph P Kaboski & Richard Rogerson & Juan I Vizcaino, 2022. "Skill-Biased Structural Change," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 89(2), pages 592-625.
    5. Ricardo Hausmann & Jason Hwang & Dani Rodrik, 2007. "What you export matters," Journal of Economic Growth, Springer, vol. 12(1), pages 1-25, March.
    6. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 407-443.
    7. Zhang, Zhenhua & Zhang, Yunpeng & Zhao, Mingcheng & Muttarak, Raya & Feng, Yanchao, 2023. "What is the global causality among renewable energy consumption, financial development, and public health? New perspective of mineral energy substitution," Resources Policy, Elsevier, vol. 85(PA).
    8. Verónica AMARANTE & Rodrigo ARIM, 2023. "Inequality and informality revisited: The Latin American case," International Labour Review, International Labour Organization, vol. 162(3), pages 431-457, September.
    9. Deininger, Klaus & Squire, Lyn, 1996. "A New Data Set Measuring Income Inequality," The World Bank Economic Review, World Bank, vol. 10(3), pages 565-591, September.
    10. Chong, Alberto & Gradstein, Mark, 2007. "Inequality and informality," Journal of Public Economics, Elsevier, vol. 91(1-2), pages 159-179, February.
    11. Hartmann, Dominik & Guevara, Miguel R. & Jara-Figueroa, Cristian & Aristarán, Manuel & Hidalgo, César A., 2017. "Linking Economic Complexity, Institutions, and Income Inequality," World Development, Elsevier, vol. 93(C), pages 75-93.
    12. Ciaschi, Matías & Galeano, Luciana & Gasparini, Leonardo, 2021. "Estructura productiva y desigualdad salarial: evidencia para América Latina," El Trimestre Económico, Fondo de Cultura Económica, vol. 88(349), pages 77-106, enero-mar.
    13. Rendall, Michelle, 2013. "Structural Change in Developing Countries: Has it Decreased Gender Inequality?," World Development, Elsevier, vol. 45(C), pages 1-16.
    14. Destek, Mehmet Akif & Hossain, Mohammad Razib & Aydın, Sercan & Shakib, Mohammed & Destek, Gamze, 2023. "Investigating the role of economic complexity in evading the resource curse," Resources Policy, Elsevier, vol. 86(PB).
    15. Chiara Binelli & Orazio Attanasio, 2010. "Mexico in the 1990s: the Main Cross-Sectional Facts," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(1), pages 238-264, January.
    16. Deininger, Klaus & Squire, Lyn, 1996. "A New Data Set Measuring Income Inequality," The World Bank Economic Review, World Bank, vol. 10(3), pages 565-591, September.
    17. Hausmann, Ricardo & Hidalgo, Cesar, 2014. "The Atlas of Economic Complexity: Mapping Paths to Prosperity," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262525429, December.
    18. Cinar Baymul & Kunal Sen, 2020. "Was Kuznets Right? New Evidence on the Relationship between Structural Transformation and Inequality," Journal of Development Studies, Taylor & Francis Journals, vol. 56(9), pages 1643-1662, July.
    19. Viktor Stojkoski & Zoran Utkovski & Ljupco Kocarev, 2016. "The Impact of Services on Economic Complexity: Service Sophistication as Route for Economic Growth," PLOS ONE, Public Library of Science, vol. 11(8), pages 1-29, August.
    20. Margarida Bandeira Morais & Julia Swart & Jacob Arie Jordaan, 2021. "Economic Complexity and Inequality: Does Regional Productive Structure Affect Income Inequality in Brazilian States?," Sustainability, MDPI, vol. 13(2), pages 1-23, January.
    21. Saurabh Mishra & Susanna Lundstrom & Rahul Anand, 2011. "Sophistication in Service Exports and Economic Growth," World Bank Publications - Reports 10098, The World Bank Group.
    22. Fadi Fawaz & Masha Rahnama-Moghadamm, 2019. "Spatial dependence of global income inequality: The role of economic complexity," The International Trade Journal, Taylor & Francis Journals, vol. 33(6), pages 542-554, November.
    23. Kang-Kook Lee & Trung V. Vu, 2020. "Economic complexity, human capital and income inequality: a cross-country analysis," The Japanese Economic Review, Springer, vol. 71(4), pages 695-718, October.
    24. Cesar A. Hidalgo & Ricardo Hausmann, 2009. "The Building Blocks of Economic Complexity," Papers 0909.3890, arXiv.org.
    25. Zaccaria,Andrea & Mishra,Saurabh & Cader,Masud Z. & Pietronero,Luciano, 2018. "Integrating services in the economic fitness approach," Policy Research Working Paper Series 8485, The World Bank.
    26. Carlos Gradín & Annalena Oppel, 2021. "Trends in inequality within countries using a novel dataset," WIDER Working Paper Series wp-2021-139, World Institute for Development Economic Research (UNU-WIDER).
    27. Matthieu Cristelli & Andrea Gabrielli & Andrea Tacchella & Guido Caldarelli & Luciano Pietronero, 2013. "Measuring the Intangibles: A Metrics for the Economic Complexity of Countries and Products," PLOS ONE, Public Library of Science, vol. 8(8), pages 1-20, August.
    28. Le, Thai-Ha & Nguyen, Canh Phuc & Su, Thanh Dinh & Tran-Nam, Binh, 2020. "The Kuznets curve for export diversification and income inequality: Evidence from a global sample," Economic Analysis and Policy, Elsevier, vol. 65(C), pages 21-39.
    29. Myriam Ben Saâd & Giscard Assoumou-Ella, 2019. "Economic Complexity and Gender Inequality in Education: An Empirical Study," Economics Bulletin, AccessEcon, vol. 39(1), pages 321-334.
    30. Nguyen, Canh Phuc, 2021. "Gender equality and economic complexity," Economic Systems, Elsevier, vol. 45(4).
    31. Gao, Jian & Zhou, Tao, 2018. "Quantifying China’s regional economic complexity," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 492(C), pages 1591-1603.
    32. Canh, Nguyen Phuc & Schinckus, Christophe & Thanh, Su Dinh, 2020. "The natural resources rents: Is economic complexity a solution for resource curse?," Resources Policy, Elsevier, vol. 69(C).
    33. Carla Sciarra & Guido Chiarotti & Luca Ridolfi & Francesco Laio, 2020. "Reconciling contrasting views on economic complexity," Nature Communications, Nature, vol. 11(1), pages 1-10, December.
    34. Mishra, Saurabh & Lundstrom, Susanna & Anand, Rahul, 2011. "Service export sophistication and economic growth," Policy Research Working Paper Series 5606, The World Bank.
    35. Emilie Le Caous & Fenghueih Huarng, 2020. "Economic Complexity and the Mediating Effects of Income Inequality: Reaching Sustainable Development in Developing Countries," Sustainability, MDPI, vol. 12(5), pages 1-26, March.
    36. Myriam Ben Saâd & Giscard Assoumou Ella, 2019. "Economic Complexity and Gender Inequality in Education: An Empirical Study," Post-Print hal-03426719, HAL.
    37. Radu Barza & Cristian Jara-Figueroa & César A. Hidalgo & Martina Viarengo, 2020. "Knowledge Intensity and Gender Wage Gaps: Evidence from Linked Employer-Employee Data," CESifo Working Paper Series 8543, CESifo.
    38. Mishra, Saurabh & Lundstrom, Susanna & Anand, Rahul, 2011. "Sophistication in Service Exports and Economic Growth," World Bank - Economic Premise, The World Bank, issue 55, pages 1-4, April.
    39. Angelica Sbardella & Emanuele Pugliese & Luciano Pietronero, 2017. "Economic development and wage inequality: A complex system analysis," PLOS ONE, Public Library of Science, vol. 12(9), pages 1-26, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hidalgo, César A., 2023. "The policy implications of economic complexity," Research Policy, Elsevier, vol. 52(9).
    2. Cesar A. Hidalgo, 2022. "Knowledge is non-fungible," Papers in Evolutionary Economic Geography (PEEG) 2229, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Nov 2022.
    3. Dominik Hartmann & Flavio L. Pinheiro, 2022. "Economic complexity and inequality at the national and regional level," Papers 2206.00818, arXiv.org, revised Jun 2022.
    4. C'esar A. Hidalgo, 2022. "Knowledge is non-fungible," Papers 2205.02167, arXiv.org.
    5. Chu, Lan Khanh & Hoang, Dung Phuong, 2020. "How does economic complexity influence income inequality? New evidence from international data," Economic Analysis and Policy, Elsevier, vol. 68(C), pages 44-57.
    6. Manuel Gómez‐Zaldívar & María Isabel Osorio‐Caballero & Edgar Juan Saucedo‐Acosta, 2022. "Income inequality and economic complexity: Evidence from Mexican states," Regional Science Policy & Practice, Wiley Blackwell, vol. 14(6), pages 344-363, December.
    7. Balland, Pierre-Alexandre & Broekel, Tom & Diodato, Dario & Giuliani, Elisa & Hausmann, Ricardo & O'Clery, Neave & Rigby, David, 2022. "Reprint of The new paradigm of economic complexity," Research Policy, Elsevier, vol. 51(8).
    8. Nguyen, Canh Phuc, 2021. "Gender equality and economic complexity," Economic Systems, Elsevier, vol. 45(4).
    9. Gnangnon, Sèna Kimm, 2022. "Effect of the utilization of non-reciprocal trade preferences offered by the QUAD countries on beneficiary countries' economic complexity," Journal of the Japanese and International Economies, Elsevier, vol. 65(C).
    10. Behrooz Shahmoradi & Nejla Ould Daoud Ellili, 2024. "Bibliometric review of research on economic complexity: current trends, developments, and future research directions," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 51(4), pages 859-891, December.
    11. C'esar A. Hidalgo, 2022. "The Policy Implications of Economic Complexity," Papers 2205.02164, arXiv.org, revised Aug 2023.
    12. Balland, Pierre-Alexandre & Broekel, Tom & Diodato, Dario & Giuliani, Elisa & Hausmann, Ricardo & O'Clery, Neave & Rigby, David, 2022. "The new paradigm of economic complexity," Research Policy, Elsevier, vol. 51(3).
    13. Margarida Bandeira Morais & Julia Swart & Jacob Arie Jordaan, 2021. "Economic Complexity and Inequality: Does Regional Productive Structure Affect Income Inequality in Brazilian States?," Sustainability, MDPI, vol. 13(2), pages 1-23, January.
    14. Rui Xue & KeYu Li & FeiFei Wang & Claude Baron, 2024. "Research Progress and Hot-spot Analysis of The Economic Complexity Research Based on CiteSpace," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 14(1), pages 1-10.
    15. Jian Gao & Tao Zhou, 2017. "Quantifying China's Regional Economic Complexity," Papers 1703.01292, arXiv.org, revised Nov 2017.
    16. Canh Phuc Nguyen & Thanh Dinh Su, 2021. "Financing the economy: The multidimensional influences of financial development on economic complexity," Journal of International Development, John Wiley & Sons, Ltd., vol. 33(4), pages 644-684, May.
    17. Nguyen, Canh Phuc, 2022. "Does economic complexity matter for the shadow economy?," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 210-227.
    18. Dung Phuong Hoang & Lan Khanh Chu, 2023. "Progression to Higher Economic Complexity: The Role of Institutions," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(4), pages 4339-4366, December.
    19. Kang-Kook Lee & Trung V. Vu, 2020. "Economic complexity, human capital and income inequality: a cross-country analysis," The Japanese Economic Review, Springer, vol. 71(4), pages 695-718, October.
    20. Ben Saad, Myriam & Brahim, Mariem & Schaffar, Alexandra & Guesmi, Khaled & Ben Saad, Rym, 2023. "Economic complexity, diversification and economic development: The strategic factors," Research in International Business and Finance, Elsevier, vol. 64(C).

    More about this item

    Keywords

    Income inequality; Productive structure; Economic complexity; Panel data;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecanpo:v:84:y:2024:i:c:p:628-645. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/economic-analysis-and-policy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.