Replication code and data for: "The heterogeneous relationship between income and inequality: a panel co-integration approach"

Svenja Flechtern and Claudius Gräbner

Published as: Flechtner, S. and Gräbner, C. (2019): The heterogeneous relationship between income and inequality: a panel co-integration approach, in: Economics Bulletin, Vol. 39(4), p. 2540-2549. Available online (open access).

Description of code

The dataset used in the paper gets recreated from the raw data as it can be downloaded from the web via R/create_dataset.R (see below).

The estimation results can be replicated via the Stata code in stata/do-file_Flechtner_Graebner_2019_gdp-ineq-cointegration-short.

The visualizations and the country classification table can be replicated using the R code in R/cointegration-results-analysis.R.

The Stata code has been written by Svenja Flechtner, the R code by Claudius Gräbner.

All code assumes the working directory to be organized as in this Github repo.

Description of results

The file output/cointegration_results summarizes the results in a readable way. The csv version is used as an input for the visualization in the paper.

It contains the following variables:

Column	Description
country	country name abbreviation as in dataset
id	id created during analysis (see stata do-file)
gini_mkt_coeff	coefficient obtained from PDOLS estimator for market gini; see stata do-file. recovered from stata log file stata/logfile_ginimarketln-GDPpercapitaln
gini_disp_coeff	coefficient obtained from PDOLS estimator for disposable gini; see stata do-file. recovered from stata log file stata/logfile_ginidispln-GDPpercapitaln
gini_mkt_t	t statistic for coefficient obtained from PDOLS estimator for market gini; see stata do-file. recovered from stata log file output/logfile_ginimarketln-GDPpercapitaln
gini_disp_t	t statistic for coefficient obtained from PDOLS estimator for disposable gini; see stata do-file. recovered from stata log file stata/logfile_ginidispln-GDPpercapitaln
gini_mkt_t_abs	absolute value of gini_mkt_t
gini_disp_t_abs	absolute value of gini_disp_t
no_obs	number of observations
df	degrees of freedom
critical_value	Critical values of Student's t distribution with respective number of degrees of freedom for alpha=0.975
gini_mkt_sign5	dummy variable with 1 if gini_mkt_t_abs >= critival_value, 0 otherwise
gini_disp_sign5	dummy variable with 1 if gini_disp_t_abs >= critival_value, 0 otherwise

Description of data

The dataset gets recreated via R/create_dataset.R. Here we assume you have dowloaded the Penn World Table 9.1 (downloaded September 17, 2019, named data/pwt91.dta) and the Standardized World Income Inequality Database (downloaded September 17, 2019, named data/swiid.dta).

Variable	Description	Unit	Source
country	The iso3 country code	iso3c	Info
year	The year of observation	year	NA
gdp_pc_chppp	Per-capita income (expenditure-side)	Real GDP at chained PPP	Penn World tables 9.1
gini_solt_disp	Post-tax inequality	Gini index	SWIID Version 8.1
gini_solt_mkt	Pre-tax inequality	Gini index	SWIID Version 8.1

The dataset relevant to reproduce the results is data/dataset.csv. The file data/dataset_raw.csv is created directly from the raw data and only excludes countries with less than 26 observations. I still contains those without a unit root in their Gini time series. As explained in the paper, these countries have been removed before the analysis and they are not contained in the file data/dataset.csv any more. See the file R/create_dataset.R for details, and the file stata/do-file_Flechtner_Graebner_2019_gdp-ineq-cointegration-short_country_unitroots for the respective unit root tests.

Descriptive statistics on the sample level

key	value
First observation	1960.00
Last observation	2017.00
Total number of observations	3522.00
GDP per capita (mean)	15362.78
GDP per capita (sd)	15449.62
Post-tax gini (mean)	36.78
Post-tax gini (sd)	8.82
Pre-tax gini (mean)	45.74
Pre-tax gini (sd)	6.55

Descriptive statistics on the country level

country	period	n	GDPpc_mean	GDPpc_sd	GINIdisp_mean	GINIdisp_sd	GINImkt_mean	GINImkt_sd
Argentina	1961-2017	57	8444.26	5250.34	39.62	3.65	40.51	2.88
Armenia	1990-2017	28	5655.97	2588.70	37.39	2.06	48.57	1.27
Australia	1967-2016	50	30132.92	9359.38	29.79	2.38	44.11	3.66
Austria	1983-2017	35	34377.57	9894.65	26.60	1.68	44.33	4.11
Belgium	1979-2016	38	31175.27	8300.94	25.00	1.24	46.62	2.69
Bangladesh	1964-2016	53	1552.67	536.29	31.41	1.92	37.64	1.39
Bulgaria	1989-2017	29	11706.67	4002.07	32.27	1.61	36.34	0.59
Belarus	1990-2017	28	12235.19	3888.21	24.02	0.59	32.34	0.95
Brazil	1960-2017	58	7281.30	3793.45	50.32	2.43	58.86	2.21
Botswana	1985-2015	31	9662.21	3656.94	58.25	0.59	64.35	0.62
Canada	1969-2017	49	31939.30	8021.50	29.70	1.42	43.56	2.52
Switzerland	1980-2015	36	42641.49	9246.72	29.76	1.19	40.01	0.51
Chile	1968-2017	50	11165.09	5703.41	46.64	1.40	51.58	1.01
China	1978-2015	38	4864.58	3156.10	35.93	5.78	38.83	6.13
Côte d’Ivoire	1985-2015	31	2440.58	275.71	40.55	0.47	45.49	0.52
Colombia	1970-2017	48	7761.95	2224.59	50.73	1.05	53.13	1.00
Costa Rica	1961-2017	57	8633.46	3075.80	42.65	2.07	45.78	2.33
Cyprus	1985-2016	32	26286.10	6014.07	29.91	0.33	47.41	0.99
Czechia	1990-2016	27	24297.70	4917.98	24.34	1.68	43.44	2.14
Germany	1960-2016	57	25766.22	10898.62	27.07	1.33	44.87	4.43
Denmark	1976-2017	42	32156.90	8677.44	23.79	1.30	44.42	2.17
Dominican Republic	1986-2016	31	8080.40	2918.68	46.09	1.45	48.45	1.19
Egypt	1975-2015	41	4157.13	2869.22	37.56	2.38	42.92	2.54
Spain	1974-2016	43	22297.42	8259.73	31.82	1.39	45.47	2.86
Estonia	1990-2016	27	17025.31	7216.35	33.45	1.63	48.33	1.38
Finland	1966-2017	52	26348.12	9612.00	23.12	1.93	43.64	3.42
Fiji	1977-2013	37	5741.31	805.40	41.15	1.14	44.15	0.92
France	1962-2016	55	25380.96	8204.36	29.15	1.18	47.60	1.07
United Kingdom	1961-2017	57	24783.06	9480.48	30.55	3.37	47.25	5.89
Georgia	1990-2017	28	5877.69	3121.20	36.85	2.36	47.39	2.27
Greece	1974-2016	43	20054.23	6057.13	34.42	1.41	49.51	1.37
Guatemala	1981-2014	34	4684.20	1143.23	49.06	2.15	50.74	2.15
Hong Kong SAR China	1964-2016	53	26631.18	15785.85	38.82	1.56	43.78	2.17
Honduras	1988-2017	30	3389.88	510.98	49.56	1.42	49.63	0.89
Croatia	1990-2016	27	15410.80	5144.75	27.34	1.04	43.66	0.87
Hungary	1970-2017	48	14600.07	6234.95	25.36	2.61	46.83	4.33
India	1973-2012	40	1898.12	1016.42	40.51	3.76	43.86	3.01
Ireland	1973-2017	45	29395.38	17683.28	30.90	1.15	49.39	1.44
Iran	1969-2016	48	8027.91	5094.69	42.70	3.16	46.05	2.89
Israel	1979-2017	39	26875.45	6689.32	33.74	2.31	48.18	2.62
Jamaica	1988-2015	28	6095.00	973.91	41.37	0.43	42.80	0.29
Jordan	1986-2014	29	5104.72	2172.69	36.54	1.34	40.98	1.46
Japan	1961-2015	55	23823.97	10470.25	27.72	2.74	39.07	3.43
Kazakhstan	1990-2017	28	12692.70	6624.78	28.32	2.03	36.44	2.03
Kenya	1976-2015	40	2125.27	231.93	46.27	1.83	51.88	1.92
South Korea	1965-2017	53	15676.64	11941.71	29.44	1.34	31.85	1.44
Sri Lanka	1970-2016	47	4592.56	2684.15	44.39	3.78	43.27	2.02
Lithuania	1990-2016	27	16120.13	6731.05	32.44	2.06	49.85	2.74
Luxembourg	1985-2016	32	65345.61	21503.00	26.31	1.77	43.37	3.10
Morocco	1984-2014	31	4824.66	1072.70	39.60	0.22	44.30	0.22
Moldova	1990-2017	28	3334.31	1218.45	36.38	2.08	55.32	1.07
Madagascar	1962-2012	51	1366.55	194.73	42.70	0.87	47.06	1.14
Mexico	1963-2016	54	11799.48	2894.60	48.09	2.44	49.09	2.20
Mauritania	1987-2014	28	2342.31	426.41	38.46	2.00	43.49	2.10
Mauritius	1987-2012	26	13131.90	2315.10	36.64	0.19	40.41	0.10
Malawi	1969-2016	48	1089.92	149.60	47.00	2.42	51.84	2.28
Malaysia	1970-2016	47	11619.42	6385.47	44.21	2.40	47.77	2.60
Netherlands	1977-2016	40	33795.46	9744.72	25.66	1.05	45.77	0.98
Norway	1970-2017	48	35930.93	15466.27	24.66	1.33	41.99	2.48
Nepal	1977-2010	34	1107.19	272.21	38.89	1.48	43.40	1.41
New Zealand	1982-2017	36	26681.40	6116.67	31.25	2.26	45.09	2.04
Pakistan	1964-2015	52	2577.75	870.10	34.15	0.36	36.71	0.45
Panama	1970-2017	48	9551.02	4841.43	49.53	1.48	53.62	1.43
Peru	1972-2017	46	5802.47	2687.42	51.03	3.11	54.41	3.31
Philippines	1961-2015	55	3564.05	1264.07	42.50	0.83	47.39	0.81
Poland	1983-2016	34	14259.19	6319.32	29.35	2.34	46.86	4.28
Portugal	1968-2016	49	16948.30	7491.68	33.47	0.63	51.76	0.84
Qatar	1988-2013	26	66222.66	46789.69	39.18	0.39	43.57	0.47
Romania	1989-2016	28	11762.35	5442.18	29.76	3.96	40.09	4.43
Rwanda	1984-2016	33	1089.50	326.06	42.98	4.49	49.02	4.95
Sudan	1970-2009	40	1705.41	422.89	37.54	0.93	41.44	0.74
Singapore	1973-2017	45	35482.87	24028.72	38.04	1.08	42.53	1.44
Sierra Leone	1969-2011	43	1211.08	192.09	42.98	2.10	47.66	2.04
El Salvador	1991-2017	27	4992.34	1377.81	43.53	3.35	45.40	2.43
Slovakia	1990-2016	27	19327.05	5875.30	24.11	2.74	41.49	2.18
Slovenia	1990-2016	27	24398.73	4984.25	23.78	0.87	39.36	1.72
Sweden	1960-2017	58	27982.98	10052.60	25.78	4.41	46.57	3.35
Thailand	1962-2017	56	6360.32	4517.71	42.51	1.73	46.33	1.89
Tunisia	1985-2015	31	7888.48	1979.38	39.42	1.52	43.96	1.55
Turkey	1987-2017	31	14550.38	5319.38	42.00	1.42	44.91	0.70
Taiwan	1964-2017	54	21815.52	14473.78	28.16	1.68	29.81	1.97
Tanzania	1969-2015	47	1528.16	427.83	41.50	1.96	39.76	1.03
Uganda	1989-2016	28	1266.95	344.48	40.73	0.68	46.24	0.77
Uruguay	1981-2017	37	12235.05	4086.30	39.25	1.70	49.91	2.00
United States	1961-2017	57	36387.70	11636.65	34.28	2.55	45.92	3.36
South Africa	1975-2015	41	9396.51	1393.29	59.23	0.47	67.15	1.19
Zambia	1976-2015	40	1839.75	823.82	52.41	0.98	58.35	1.20

Citations for the data

Feenstra, Robert C., Robert Inklaar and Marcel P. Timmer (2015): The Next Generation of the Penn World Table, American Economic Review, Vol. 105(10), 3150-3182, available for download at www.ggdc.net/pwt

Solt, Frederick (2019): Measuring Income Inequality Across Countries and Over Time: The Standardized World Income Inequality Database, SWIID Version 8.1, May 2019.