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

David Gabauer, Rangan Gupta (), Jacobus Nel () and Woraphon Yamaka ()
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Jacobus Nel: Department of Economics, University of Pretoria, Pretoria, 0002, South Africa
Woraphon Yamaka: Center of Excellence in Econometrics, Faculty of Economics, Chiang Mai University, Chiang Mai, Thailand

No 202084, Working Papers from University of Pretoria, Department of Economics

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.

Keywords: Labor Productivity; Inequality; Time-Varying Predictions (search for similar items in EconPapers)
JEL-codes: C32 D31 E24 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2020-09
New Economics Papers: this item is included in nep-eff and nep-mac
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