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Data and code for the paper "The heterogeneous relationship between income and inequality: a panel co-integration approach"
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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.

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