Household Consumption and Income Inequality

This article seeks to explore the extent to which household consumption causes income inequality and addresses the questions: (i) is there a linear relationship between household consumption expenditure and income inequality? (ii) what is the causal relationship between household consumption and inc...

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Bibliographic Details
Published in:World economics (Henley-on-Thames, England) England), 2021-09, Vol.22 (3)
Main Author: Swamy, Vighneswara
Format: Article
Language:English
Subjects:
Consumer behavior
Consumption
Economic policy
Economic theory
Global economy
Households
Income inequality
Macroeconomics
Online Access:Get full text
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Summary:This article seeks to explore the extent to which household consumption causes income inequality and addresses the questions: (i) is there a linear relationship between household consumption expenditure and income inequality? (ii) what is the causal relationship between household consumption and income inequality? and (iii) does household consumption impact differently on rural and urban income inequalities? The results provide evidence of rising consumption inequality causing rise in income inequality. The causality tests show the presence of a unidirectional causality flowing from household consumption to income inequality. The findings provide insights that macroeconomic policymakers can use to manoeuvre household consumption expenditure using appropriate policy instruments.
ISSN:1468-1838
1474-3884