Correlation of Income Inequality and Entrepreneurial Activity

Authors

1 Department of Marketing, management and entrepreneurship, V.N. Karazin Kharkiv National University, Kharkiv, Ukraine

2 Department of International Е-Commerce and Hotel&Restaurant Business, V.N. Karazin Kharkiv National University, Kharkiv, Ukraine

3 Department of Management innovative entrepreneurship and international economic relations, National Technical University «Kharkiv Polytechnic Institute», Kharkiv, Ukraine.

4 Mayor, Municipal Office Gromadka, Gromadka, Poland

10.22094/joie.2020.677815

Abstract

The fact of growth of inequality in distribution of income both inside the national economies and between the countries is confirmed by many empirical studies. In particular, these are annual reports of the World Bank, UNIDO and European Commission. The growth of inequality in distribution of income causes social tension inside the countries and promotes conflicts between the countries. Entrepreneurship serves as a form of softening social tension. Entrepreneurial activity ensures a significant percentage of employment and self-employment in many countries providing the income of the population at the level above the minimum consumption rate. In some cases, entrepreneurship could serve as a social lift for transition to a higher level of income distribution.
The goal of this article is a statistical check of dependence between the level of income inequality and entrepreneurial activity in countries with different levels of GDP. A system approach and correlation analysis are used as the study methods.
The statistical check of a correlation between the Gini index and level of entrepreneurial activity showed significant differences in the correlation degree of the said indicators for different countries and time periods. An assumption was made that there is a statistical dependence between the indicators, however, inclusion of additional parameters, among which we can find inequality of the property distribution and the level of institutional support of entrepreneurship, is required.

Graphical Abstract

Correlation of Income Inequality and Entrepreneurial Activity

Keywords

References

Aghion, P, Akcigit. U, Bergeaud, A, Blundell, R. & Hemous, D. (2016). Innovation and Top Income Inequality. Retrieved from https://scholar.harvard.edu/files/aghion/files/innovation_and_top_income_inequality.pdf.
Atkinson, A.B., Piketty, T. & Saez, E. (2011) Top Incomes in the Long Run of History. Journal of Economic Literature, 49:1, 3-71.
Bakija, J., Cole, A. & Heim, B. (2012). Jobs and Income Growth of Top Earners and the Causes of Changing Income Inequality: Evidence from U.S. Tax Return Data. Retrieved from https://web.williams.edu/Economics/wp/BakijaColeHeimJobsIncomeGrowthTopEarners.pdf.
Castells, M. (2000) The Rise of the Network Society. 2nd ed., John Wiley & Sons, Ltd., New York.
Commission of the European Communities (2003) Green Paper Entrepreneurship in Europa. Brussels. Retrieved from https://web.archive.org/web/20040723123106/http://europa.eu.int/comm/enterprise/entrepreneurship/green_paper/compilation_en.pdf.
Communication From The Commission To The European Parliament, The Council, The European Economic And Social Committee And The Committee Of The Regions. A Digital Single Market Strategy for Europe. Brussels, 6.5.2015 COM(2015) 192 final. Retrieved from http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1447773803386&uri=CELEX%3A52015DC0192
Davidsson, P. (2016) Researching entrepreneurship: Conceptualization and design (2nd edn), Springer, New York.
Gall, C. (2019). Turkey Enters Recession, a Blow for Erdogan as Elections Near. Retrieved from https://www.nytimes.com/2019/03/11/business/turkey-recession.html.
Gontareva, I., Babenko, V., Shmatko, N., Litvinov, O. & Obruch, H. (2020). The model of network consulting communication at the early stages of entrepreneurship. WSEAS Transactions on Environment and Development, 16, 390-396.
GINI index (World Bank estimate). URL: https://data.worldbank.org/indicator/SI.POV.GINI?end=2015&locations=PL&start=1993&view=chart
Global Entrepreneurship Monitor (GEM) (2017). Global Report 2016-2017. Retrieved from https://www.gemconsortium.org/report/gem-2016-2017-global-report.
Hanushek, E.A. & Kimko, D.D. (2000). Schooling, Labor-Force Quality, and the Growth of Nations. The American Economic Review, 90, 5, 1184-1208.
Income share held by highest 10% (World Bank estimate). URL: https://data.worldbank.org/indicator/SI.DST.10TH.10?view=chart
Krusell, P., Ohanian, L.E., Rios-Rull, J.-V. & Violante G.L. (2000). Capital-skill complementarity and inequality: A macroeconomic analysis. Econometrica, 68, 5, 1029-1053.
Kuznets, S. (1955). Economic Growth and Income Inequality. American Economic Review, 45, 1-28.
Lansing, K.J., Markiewicz, A. (2012). Top incomes, rising inequality, and welfare, Working Paper 10, Norges Bank Research. Retrieved from http://www.norges-bank.no/contentassets/16dd2a93e9f948fe8c5185b7892d49b8/norges_bank_working_paper_2012_10.pdf
Ponomarenko, V., Gontareva, I. (2017) The system of causal connections between entrepreneurial activity and economic development. Economic Annals-XXI, 165(5-6), 4-7.
Romer, P. (1990). Endogenous Technical Change. Journal of Political Economy, 98, 71-102.
Shorikov, A.F., Babenko, V.A. (2014). Optimization of assured result in dynamical model of management of innovation process in the enterprise of agricultural production complex. Economy of Region, 1, 196-202.
Song, J., Price, D., Guvenen ,F., Bloom, N. & von Wachterk, T. (2015). Firming Up Inequality. Stanford University, NBER. Retrieved from http://www.econ.ucla.edu/tvwachter/papers/FUI_website_NBER_SI.pdf.
The UTIP Global Inequality Data Sets 1963-2008 (2014). The University of Texas Inequality Project. Retrieved from https://utip.lbj.utexas.edu/papers/UTIP_68.pdf.
Total early-stage Entrepreneurial Activity (TEA). The World Bank. Retrieved from: https://tcdata360.worldbank.org/indicators/aps.ea.total?country=BRA&indicator=3116&viz=line_chart&years=2001,2017
World development report: DIGITAL DIVIDENDS. (2016) International Bank for Reconstruction and Development / The World Bank. Retrieved from: http://documents.worldbank.org/curated/en/896971468194972881/pdf/102725-PUB-Replacement-PUBLIC.pdf.
Journal of Optimization in Industrial Engineering
Volume 14, Special Issue
Winter and Spring 2021
Pages 33-38

Files

Share

How to cite

Statistics