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Time-Varying Predictability of Labor Productivity on Inequality in United Kingdom

Author

Listed:
  • David Gabauer

    (Software Competence Center Hagenberg)

  • Rangan Gupta

    (University of Pretoria)

  • Jacobus Nel

    (University of Pretoria)

  • Woraphon Yamaka

    (Chiang Mai University)

Abstract

In this paper, we analyze time-varying predictability of labor productivity for growth in income (and consumption) inequality of the United Kingdom (UK) based on a high-frequency (quarterly) data set over 1975:Q1 to 2016:Q1. Results indicate that the growth rate of an index of labor productivity has a strong predictive power on growth rate of income (and consumption) inequality in the UK. Interestingly, the strength of the predictive power is found to be higher towards the end of the sample period in the wake of the global financial crisis. In addition, based on time-varying impulse response function analysis, we find that inequality and labor productivity growth rates are in general negatively associated over our sample period, barring a short-lived positive impact initially.

Suggested Citation

  • David Gabauer & Rangan Gupta & Jacobus Nel & Woraphon Yamaka, 2021. "Time-Varying Predictability of Labor Productivity on Inequality in United Kingdom," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 155(3), pages 771-788, June.
    • Handle: RePEc:spr:soinre:v:155:y:2021:i:3:d:10.1007_s11205-021-02622-w
    DOI: 10.1007/s11205-021-02622-w
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    More about this item

    Keywords

    Labor productivity; Inequality; Time-varying predictions;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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