The impacts of external and internal uncertainties on income inequality in the ASEAN 5 countries
Document Type
Article
Publication Date
1-1-2021
Abstract
From a theoretical standpoint, increasing uncertainty causes delays in additional investment and hiring. Thus, income gaps between rich and poorer groups are expected to stretch further in times of uncertainty. Given that the causal relationship between uncertainty and income inequality poses an area of concern. This study utilised the Autoregressive Distributed Lag (ARDL) estimation technique on data ranging from 1961 to 2020 to examine the possible impact of external uncertainty (world uncertainty) and internal uncertainty (within-country uncertainty) on income inequality in the ASEAN 5 countries. The results demonstrate that, in the long run, the income inequality of the ASEAN 5 countries was more sensitive to external uncertainty shocks (world uncertainty) than to internal uncertainty shocks (within-country uncertainty). More specifically, external uncertainty was a significant determinant of income inequality of all ASEAN 5 countries. In contrast, internal uncertainty only mattered for the income inequality levels of Malaysia and Thailand. On the other hand, in the short run, while external uncertainty affected Thailand’s income inequality level significantly, internal uncertainty was found to matter for the income inequality level of Malaysia, Singapore and Thailand. Thus, the results reflect that the impact of uncertainties on income inequality on the ASEAN 5 countries was more significant in the long run than in the short run © 2021. International Journal of Economics and Management. All Rights Reserved.
Keywords
Uncertainty, Income inequality, ARDL, ASEAN 5
Divisions
Faculty_of_Business_and_Accountancy
Publication Title
International Journal of Economics and Management
Volume
15
Issue
3
Publisher
School of Business and Economics, Universiti Putra Malaysia,